<PAGE>
                                                                     EXHIBIT 4.1

                     MERRILL LYNCH MORTGAGE INVESTORS, INC.
                                    Depositor

                            LITTON LOAN SERVICING LP,
                                    Servicer

                                       and

                             WELLS FARGO BANK, N.A.,
                                     Trustee

                     --------------------------------------

                         POOLING AND SERVICING AGREEMENT
                            Dated as of July 1, 2004

                     --------------------------------------

                     Merrill Lynch Mortgage Investors Trust
            Mortgage Loan Asset-Backed Certificates, Series 2004-HE1

<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                                     PAGE
<S>                                                                                                                  <C>
ARTICLE I             DEFINITIONS..............................................................................         1
ARTICLE II            CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES.............................        39

         SECTION 2.01.              Conveyance of Mortgage Loans...............................................        39
         SECTION 2.02.              Acceptance by Trustee of the Mortgage Loans................................        42
         SECTION 2.03.              Representations, Warranties and Covenants of the Depositor.................        43
         SECTION 2.04.              Representations and Warranties of the Servicer.............................        47
         SECTION 2.05.              Substitutions and Repurchases of Mortgage Loans Which Are Not
                                    "Qualified Mortgages"......................................................        48
         SECTION 2.06.              Authentication and Delivery of Certificates................................        49
         SECTION 2.07.              REMIC Elections............................................................        49
         SECTION 2.08.              Covenants of the Servicer..................................................        52
         SECTION 2.09.              [RESERVED].................................................................        53
         SECTION 2.10.              [RESERVED].................................................................        53
         SECTION 2.11.              Permitted Activities of the Trust..........................................        53
         SECTION 2.12.              Qualifying Special Purpose Entity..........................................        53

ARTICLE III           ADMINISTRATION AND SERVICING  OF MORTGAGE LOANS..........................................        53

         SECTION 3.01.              Servicer to Service Mortgage Loans.........................................        53
         SECTION 3.02.              Servicing and Subservicing; Enforcement of the Obligations of Servicer.....        54
         SECTION 3.03.              Rights of the Depositor and the Trustee in Respect of the Servicer.........        55
         SECTION 3.04.              Trustee to Act as Servicer.................................................        55
         SECTION 3.05.              Collection of Mortgage Loan Payments; Collection Account; Certificate
                                    Account....................................................................        56
         SECTION 3.06.              Collection of Taxes, Assessments and Similar Items; Escrow Accounts........        59
         SECTION 3.07.              Access to Certain Documentation and Information Regarding the
                                    Mortgage Loans.............................................................        60
         SECTION 3.08.              Permitted Withdrawals from the Collection Account and Certificate
                                    Account....................................................................        60
         SECTION 3.09.              [RESERVED].................................................................        62
         SECTION 3.10.              Maintenance of Hazard Insurance............................................        62
         SECTION 3.11.              Enforcement of Due-On-Sale Clauses; Assumption Agreements..................        63
         SECTION 3.12.              Realization Upon Defaulted Mortgage Loans; Determination of Excess
                                    Proceeds...................................................................        64
         SECTION 3.13.              Trustee to Cooperate; Release of Mortgage Files............................        67
         SECTION 3.14.              Documents, Records and Funds in Possession of Servicer to be Held for
                                    the Trustee................................................................        68
         SECTION 3.15.              Servicing Compensation.....................................................        68
         SECTION 3.16.              Access to Certain Documentation............................................        69
         SECTION 3.17.              Annual Statement as to Compliance..........................................        69
         SECTION 3.18.              Annual Independent Public Accountants' Servicing Statement; Financial
                                    Statements.................................................................        69
         SECTION 3.19.              Rights of the NIMs Insurer.................................................        70
         SECTION 3.20.              Periodic Filings...........................................................        70
</TABLE>

                                       i

<PAGE>

                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
<CAPTION>
                                                                                                                     PAGE
<S>                                                                                                                  <C>

         SECTION 3.21.              Annual Certificate by Trustee..............................................        70
         SECTION 3.22.              Annual Certificate by Servicer.............................................        71
         SECTION 3.23.              Prepayment Penalty Reporting Requirements..................................        72
         SECTION 3.24.              Statements to Trustee......................................................        72
         SECTION 3.25.              Indemnification............................................................        72
         SECTION 3.26.              Nonsolicitation............................................................        73

ARTICLE IV            DISTRIBUTIONS............................................................................        73

         SECTION 4.01.              Advances...................................................................        73
         SECTION 4.02.              Reduction of Servicing Compensation in Connection with Prepayment
                                    Interest Shortfalls........................................................        74
         SECTION 4.03.              Distributions on the REMIC Interests.......................................        74
         SECTION 4.04.              Distributions..............................................................        74
         SECTION 4.05.              Monthly Statements to Certificateholders...................................        79

ARTICLE V             THE CERTIFICATES.........................................................................        81

         SECTION 5.01.              The Certificates...........................................................        81
         SECTION 5.02.              Certificate Register; Registration of Transfer and Exchange of
                                    Certificates...............................................................        82
         SECTION 5.03.              Mutilated, Destroyed, Lost or Stolen Certificates..........................        85
         SECTION 5.04.              Persons Deemed Owners......................................................        86
         SECTION 5.05.              Access to List of Certificateholders' Names and Addresses..................        86
         SECTION 5.06.              Book-Entry Certificates....................................................        86
         SECTION 5.07.              Notices to Depository......................................................        87
         SECTION 5.08.              Definitive Certificates....................................................        87
         SECTION 5.09.              Maintenance of Office or Agency............................................        88

ARTICLE VI            THE DEPOSITOR AND THE SERVICER...........................................................        88

         SECTION 6.01.              Respective Liabilities of the Depositor and the Servicer...................        88
         SECTION 6.02.              Merger or Consolidation of the Depositor or the Servicer...................        88
         SECTION 6.03.              Limitation on Liability of the Depositor, the Servicer and Others..........        88
         SECTION 6.04.              Limitation on Resignation of Servicer......................................        89
         SECTION 6.05.              Errors and Omissions Insurance; Fidelity Bonds.............................        89

ARTICLE VII           DEFAULT; TERMINATION OF SERVICER.........................................................        90

         SECTION 7.01.              Events of Default..........................................................        90
         SECTION 7.02.              [RESERVED].................................................................        91
         SECTION 7.03.              Trustee to Act; Appointment of Successor...................................        92
         SECTION 7.04.              Notification to Certificateholders.........................................        93

ARTICLE VIII          CONCERNING THE TRUSTEE...................................................................        93

         SECTION 8.01.              Duties of Trustee..........................................................        93
         SECTION 8.02.              Certain Matters Affecting the Trustee......................................        94
         SECTION 8.03.              Trustee Not Liable for Mortgage Loans......................................        95
         SECTION 8.04.              Trustee May Own Certificates...............................................        96
         SECTION 8.05.              Trustee's Fees and Expenses................................................        96
</TABLE>

                                       ii

<PAGE>

                                TABLE OF CONTENTS
                                   (continued)
<TABLE>
<CAPTION>
                                                                                                                     PAGE
<S>                                                                                                                  <C>
         SECTION 8.06.              Indemnification of Trustee.................................................        96
         SECTION 8.07.              Eligibility Requirements for Trustee.......................................        97
         SECTION 8.08.              Resignation and Removal of Trustee.........................................        97
         SECTION 8.09.              Successor Trustee..........................................................        98
         SECTION 8.10.              Merger or Consolidation of Trustee.........................................        98
         SECTION 8.11.              Appointment of Co-Trustee or Separate Trustee..............................        98
         SECTION 8.12.              Tax Matters................................................................       100

ARTICLE IX            TERMINATION..............................................................................       102

         SECTION 9.01.              Termination upon Liquidation or Repurchase of all Mortgage Loans...........       102
         SECTION 9.02.              Final Distribution on the Certificates.....................................       103
         SECTION 9.03.              Additional Termination Requirements........................................       104

ARTICLE X             MISCELLANEOUS PROVISIONS.................................................................       105

         SECTION 10.01.             Amendment..................................................................       105
         SECTION 10.02.             Counterparts...............................................................       106
         SECTION 10.03.             Governing Law..............................................................       106
         SECTION 10.04.             Intention of Parties.......................................................       106
         SECTION 10.05.             Notices....................................................................       107
         SECTION 10.06.             Severability of Provisions.................................................       108
         SECTION 10.07.             Assignment.................................................................       108
         SECTION 10.08.             Limitation on Rights of Certificateholders.................................       108
         SECTION 10.09.             Inspection and Audit Rights................................................       109
         SECTION 10.10.             Certificates Nonassessable and Fully Paid..................................       109
         SECTION 10.11.             Third Party Rights.........................................................       109
         SECTION 10.12.             Additional Rights of the NIMs Insurer......................................       109
         SECTION 10.13.             Reserved...................................................................       110
         SECTION 10.14.             Assignment; Sales; Advance Facilities......................................       110
</TABLE>

<TABLE>
<S>                        <C>
EXHIBIT A                  FORMS OF OFFERED CERTIFICATES
EXHIBIT B-1                MORTGAGE LOAN SCHEDULE
EXHIBIT B-2                GROUP A MORTGAGE LOAN SCHEDULE
EXHIBIT B-3                GROUP B MORTGAGE LOAN SCHEDULE
EXHIBIT C                  [RESERVED]
EXHIBIT D                  FORM OF TRUSTEE CERTIFICATION
EXHIBIT E-1                FORM OF TRANSFEREE'S LETTER AND AFFIDAVIT
EXHIBIT E-2                FORM OF TRANSFEROR'S AFFIDAVIT
EXHIBIT F                  FORM OF TRANSFEROR CERTIFICATE
EXHIBIT G                  FORM OF INVESTMENT LETTER
EXHIBIT H                  FORM OF RULE 144A LETTER
EXHIBIT I                  REQUEST FOR RELEASE
EXHIBIT J                  [RESERVED]
EXHIBIT K                  FORM OF OFFICER'S CERTIFICATE OF TRUSTEE
EXHIBIT L                  FORM OF OFFICER'S CERTIFICATE OF SERVICER
EXHIBIT M                  [RESERVED]
</TABLE>

                                      iii

<PAGE>
                               TABLE OF CONTENTS
                                  (continued)

<TABLE>
<CAPTION>
                                                                                         PAGE
<S>                    <C>                                                               <C>
EXHIBIT N              FORM OF CAP CONTRACT
EXHIBIT O              [RESERVED]
EXHIBIT P              FORM OF ERISA REPRESENTATION LETTER (CLASS C, CLASS P AND
CLASS R CERTIFICATES)
EXHIBIT Q              FORM OF POWER OF ATTORNEY
</TABLE>

                                       iv

<PAGE>

         POOLING AND SERVICING AGREEMENT, dated as of July 1, 2004, among
MERRILL LYNCH MORTGAGE INVESTORS, INC., a Delaware corporation, as depositor
(the "Depositor"), LITTON LOAN SERVICING LP, a Delaware limited partnership, as
servicer (the "Servicer") and WELLS FARGO BANK, N.A., a national banking
association, as trustee (the "Trustee").

         The Depositor is the owner of the Trust Fund that is hereby conveyed to
the Trustee in return for the Certificates. The Trust Fund for federal income
tax purposes will consist of (i) seven real estate mortgage investment conduits,
(ii) the right to receive (x) prepayment penalties on the Mortgage Loans, (y)
amounts paid by the Servicer, the Seller or the Transferors in respect of
prepayment penalties or waivers thereof pursuant to this Agreement or the
Transfer Agreements, as applicable and (z) amounts received in respect of any
indemnification paid as a result of a prepayment penalty being unenforceable in
breach of the representations and warranties set forth in the Transfer
Agreements, (iii) the Cap Contract and the Cap Contract Account and (iv) the
grantor trusts described in Section 2.07 hereof. The Lower Tier REMIC will
consist of all of the assets constituting the Trust Fund (other than the assets
described in clauses (ii), (iii) and (iv) above, the Lower Tier REMIC Regular
Interests, the Middle Tier REMIC Regular Interests, the Class UTB1 Interest, the
Class UTB2 Interest, the Class UTB3 Interest and the Class UTC Interest) and
will be evidenced by the Lower Tier REMIC Regular Interests (which will be
uncertificated and will represent the "regular interests" in the Lower Tier
REMIC) and the Class LTR Interest as the single "residual interest" in the Lower
Tier REMIC. The Trustee will hold the Lower Tier REMIC Regular Interests. The
Middle Tier REMIC will consist of the Lower Tier REMIC Regular Interests and
will be evidenced by the Middle Tier REMIC Regular Interests (which will
represent the "regular interests" in the Middle Tier REMIC) and the Class MTR
Interest as the single "residual interest" in the Middle Tier REMIC. The Trustee
will hold the Middle Tier REMIC Regular Interests. The Upper Tier REMIC will
consist of the Middle Tier REMIC Regular Interests and will be evidenced by the
Upper Tier REMIC Regular Interests (which will represent the "regular interests"
in the Upper Tier REMIC) and the Residual Interest as the single "residual
interest" in the Upper Tier REMIC. The Trustee will hold the Class UTB1
Interest, the Class UTB2 Interest, the Class UTB3 Interest and the Class UTC
Interest. The B1 REMIC will consist of the Class UTB1 Interest and will be
evidenced by the Class B-1 Certificates (which will represent the "regular
interest" in the B1 REMIC) and the Class B1R Interest as the single "residual
interest" in the B1 REMIC. The B2 REMIC will consist of the Class UTB2 Interest
and will be evidenced by the Class B-2 Certificates (which will represent the
"regular interest" in the B2 REMIC) and the Class B2R Interest as the single
"residual interest" in the B2 REMIC. The B3 REMIC will consist of the Class UTB3
Interest and will be evidenced by the Class B-3 Certificates (which will
represent the "regular interest" in the B3 REMIC) and the Class B3R Interest as
the single "residual interest" in the B3 REMIC. The C REMIC will consist of the
Class UTC Interest and will be evidenced by the Uncertificated Class C Interest
(which will represent the "regular interest" in the C REMIC) and the Class CR
Interest as the single "residual interest" in the C REMIC. The Class R
Certificate will represent beneficial ownership of the Class LTR Interest, the
Class MTR Interest and the Residual Interest. The Class R-X Certificate will
represent beneficial ownership of the Class B1R Interest, the Class B2R
Interest, the Class B3R Interest and the Class CR Interest. The "latest possible
maturity date" for federal income tax purposes of all interests created hereby
will be the Latest Possible Maturity Date.

         All covenants and agreements made by the Transferor in the Transfer
Agreement, by the Seller in the Sale Agreement and by the Depositor and the
Trustee herein with respect to the Mortgage Loans and the other property
constituting the Trust Fund are for the benefit of the Holders from time to time
of the Certificates and, to the extent provided herein, the NIMs Insurer.

         In consideration of the mutual agreements herein contained, the
Depositor, the Servicer and the Trustee hereby agree as follows:

<PAGE>

                                    ARTICLE I
                                   DEFINITIONS

         Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:

         Accepted Servicing Practices: The Servicer's normal servicing
practices, which will conform to the mortgage servicing practices of prudent
mortgage lending institutions which service for their own account mortgage loans
of the same type as the Mortgages Loans in the jurisdictions in which the
related Mortgaged Properties (or Underlying Mortgaged Properties, in the case of
Co-op Loans) are located.

         Accrual Period: With respect to each Class of Certificates, the Lower
Tier REMIC Interests, the Middle Tier REMIC Interests, the Class UTB1 Interest,
the Class UTB2 Interest, the Class UTB3 Interest and the Class UTC Interest and
any Distribution Date, the period commencing on the immediately preceding
Distribution Date (or, in the case of the first Distribution Date, the Closing
Date) and ending on the day immediately preceding such Distribution Date. All
calculations of interest on each Class of Certificates, the Lower Tier REMIC
Interests, the Middle Tier REMIC Interests, the Class UTB1 Interest, the Class
UTB2 Interest, the Class UTB3 Interest and the Class UTC Interest will be made
on the basis of the actual number of days elapsed in the related Accrual Period
and a 360 day year. Notwithstanding the foregoing, the initial Accrual Period
for each Lower Tier REMIC Interest, Middle Tier REMIC Interest, the Class UTB1
Interest, the Class UTB2 Interest, the Class UTB3 Interest and the Class UTC
Interest and the Class C Certificates will have 30 days.

         Adjustable Rate Mortgage Loan: A Mortgage Loan identified in the
Mortgage Loan Schedule as having a Mortgage Rate which is adjustable.

         Adjustment Date: As to each Adjustable Rate Mortgage Loan, each date on
which the related Mortgage Rate is subject to adjustment, as provided in the
related Mortgage Note.

         Advance: The aggregate of the advances required to be made by the
Servicer with respect to any Distribution Date pursuant to Section 4.01, the
amount of any such advances being equal to the sum of the aggregate of payments
of principal and interest (net of the Servicing Fee Rate) on the Mortgage Loans
that were due during the applicable Due Period and not received as of the close
of business on the related Determination Date, less the aggregate amount of any
such Delinquent payments that the Servicer has determined would constitute a
Non-Recoverable Advance were an advance to be made with respect thereto;
provided, however, that with respect to any Mortgage Loan that is (x) a second
lien Mortgage Loan or (y) has been converted to an REO Property, the obligation
to make advances shall only be to payments of interest.

         Advance Facility: A financing or other facility as described in Section
10.07.

         Advance Facility Notice: As defined in Section 10.14(b).

         Advance Financing Person: As defined in Section 10.14(a).

         Advance Reimbursement Amounts: As defined in Section 10.14(a).

         Affiliate: With respect to any specified Person, any other Person
controlling, controlled by or under common control with such Person. For the
purposes of this definition, "control" means the power to direct the management
and policies of a Person, directly or indirectly, whether through ownership of
voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.

                                       2
<PAGE>

         Aggregate Certificate Principal Balance: For any date of determination,
the sum of the Class A-1 Certificate Principal Balance, the Class A-2
Certificate Principal Balance, the Class R Certificate Principal Balance, the
Class M-1 Certificate Principal Balance, the Class M-2 Certificate Principal
Balance, the Class B-1 Certificate Principal Balance, the Class B-2 Certificate
Principal Balance and the Class B-3 Certificate Principal Balance, in each case
as of such date of determination.

         Agreement: This Pooling and Servicing Agreement and any and all
amendments or supplements hereto made in accordance with the terms herein.

         Applied Realized Loss Amount: With respect to any Distribution Date,
the amount, if any, by which, the sum of (i) the Aggregate Certificate Principal
Balance and (ii) the Class C Certificate Principal Balance after distributions
of principal on such Distribution Date exceeds the aggregate Stated Principal
Balance of the Mortgage Loans as of such Distribution Date.

         Appraised Value: With respect to a Mortgage Loan the proceeds of which
were used to purchase the related Mortgaged Property (or the related residential
dwelling unit in the Underlying Mortgaged Property in the case of a Co-op Loan),
the "Appraised Value" of a Mortgaged Property (or the related residential
dwelling unit in the Underlying Mortgaged Property, in the case of a Co-op Loan)
is the lesser of (1) the appraised value based on an appraisal made for the
Seller by an independent fee appraiser at the time of the origination of the
related Mortgage Loan, and (2) the sales price of such Mortgaged Property (or
the related residential dwelling unit in the Underlying Mortgaged Property, in
the case of a Co-op Loan) at such time of origination. With respect to a
Mortgage Loan the proceeds of which were used to refinance an existing mortgage
loan, the "Appraised Value" is the appraised value of the Mortgaged Property (or
the residential dwelling unit in the Underlying Mortgaged Property, in the case
of a Co-op Loan) based upon the appraisal obtained at the time of refinancing.

         Assignment of Mortgage: An assignment of the Mortgage, notice of
transfer (or UCC-3 assignment (or equivalent instrument) with respect to each
Co-op Loan) or equivalent instrument, in recordable form (except in the case of
a Co-op Loan) (except for the name of the assignee if such Mortgage Loan is
endorsed in blank), sufficient under the laws of the jurisdiction where the
related Mortgaged Property (or Underlying Mortgaged Property, in the case of a
Co-op Loan) is located to reflect of record the sale and assignment of the
Mortgage Loan to the Trustee, which assignment, notice of transfer or equivalent
instrument may, if permitted by law, be in the form of one or more blanket
assignments covering Mortgages secured by Mortgaged Properties located in the
same county.

         Auction: The one-time auction conducted by the Trustee, as described in
Section 9.01(b) hereof.

         Auction Date: The date on which the Auction occurs.

         Available Funds Cap: With respect to any Distribution Date, the per
annum rate equal to 12 times the quotient of (x) the total scheduled interest on
the Mortgage Loans based on the Net Mortgage Rates in effect on the related Due
Date, divided by (y) the Aggregate Certificate Principal Balance immediately
prior to such Distribution Date, multiplied by 30 and divided by the actual
number of days in the related Accrual Period.

         Balloon Loan: A Mortgage Loan having an original term to stated
maturity of approximately 15 years which provides for level monthly payments of
principal and interest based on a 30 year amortization schedule, with a balloon
payment of the remaining outstanding principal balance due on such Mortgage Loan
at its stated maturity.

         Book-Entry Certificates: Any of the Certificates that shall be
registered in the name of the Depository or its nominee, the ownership of which
is reflected on the books of the Depository or on the

                                       3
<PAGE>

books of a Person maintaining an account with the Depository (directly, as a
"Depository Participant", or indirectly, as an indirect participant in
accordance with the rules of the Depository and as described in Section 5.06).
As of the Closing Date, each of the Offered Certificates (other than the Class R
Certificate) constitutes a Class of Book-Entry Certificates.

         Bring Down Letter: Each of the CIT Bring Down Letter, the Fieldstone
Bring Down Letter and the Ownit Bring Down Letter.

         Business Day: Any day other than (1) a Saturday or a Sunday, or (2) a
day on which banking institutions in the State of Texas, State of Maryland,
State of Minnesota or the City of New York, New York are authorized or obligated
by law or executive order to be closed.

         B1 REMIC: As described in the Preliminary Statement and Section 2.07.

         B2 REMIC: As described in the Preliminary Statement and Section 2.07.

         B3 REMIC: As described in the Preliminary Statement and Section 2.07.

         Cap Contract: The amended confirmation and agreement and any related
confirmation thereto, between the Trustee and Swiss Re Financial Products
Corporation (in the form of Exhibit N hereto).

         Cap Contract Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 4.04(k) in the name of the Trustee
for the benefit of the Trust Fund and designated "Wells Fargo Bank, N.A., as
Trustee, in trust for registered holders of Merrill Lynch Mortgage Investors
Trust, Mortgage Loan Asset-Backed Certificates, Series 2004-HE1." Funds in the
Cap Contract Account shall be held in trust for the Trust Fund for the uses and
purposes set forth in this Agreement.

         Cap Contract Notional Balance: With respect to any Distribution Date,
the Cap Contract Notional Balance set forth below for such Distribution Date.

                            ONE-MONTH LIBOR CAP TABLE

<TABLE>
<CAPTION>
                                                                    1ML STRIKE
              BEGINNING                                           LOWER COLLAR (%)     1ML STRIKE
PERIOD         ACCRUAL      ENDING ACCRUAL   NOTIONAL BALANCE($)        (1)         UPPER COLLAR (%)
------         -------      --------------   -------------------        ---         ----------------
<S>           <C>           <C>              <C>                  <C>               <C>
  1            07/22/04        08/25/04        300,186,000.00          5.341              8.860
  2            08/25/04        09/25/04        296,049,943.79          5.897              8.860
  3            9/25/04         10/25/04        291,254,494.31          6.109              8.860
  4            10/25/04        11/25/04        285,812,131.96          5.903              8.860
  5            11/25/04        12/25/04        279,741,606.04          6.116              8.860
  6            12/25/04        01/25/05        273,077,516.67          5.911              8.860
  7            01/25/05        02/25/05        265,963,433.94          5.916              8.860
  8            02/25/05        03/25/05        258,612,058.68          6.599              8.860
  9            03/25/05        04/25/05        251,314,823.27          5.930              8.860
  10           04/25/05        05/25/05        244,217,015.38          6.148              8.860
  11           05/25/05        06/25/05        237,319,462.44          5.944              8.860
  12           06/25/05        07/25/05        230,616,430.37          6.163              8.860
  13           07/25/05        08/25/05        224,102,350.98          5.960              8.860
  14           08/25/05        09/25/05        217,771,817.02          5.967              8.860
  15           09/25/05        10/25/05        211,611,170.85          6.188              8.860
  16           10/25/05        11/25/05        205,549,856.12          5.984              8.860
  17           11/25/05        12/25/05        199,156,754.26          6.225              8.860
  18           12/25/05        01/25/06        192,138,747.49          6.207              8.860
  19           01/25/06        02/25/06        183,637,684.36          6.615              8.860
</TABLE>

                                       4
<PAGE>

<TABLE>
<S>          <C>             <C>             <C>                     <C>                <C>
20           02/25/06        03/25/06        174,599,469.82          8.432              8.860
21           03/25/06        04/25/06        166,066,308.93          8.065              8.860
22           04/25/06        05/25/06        158,279,763.37          8.358              8.860
23           05/25/06        06/25/06        151,378,668.32          8.092              8.860
24           06/25/06        07/25/06        145,833,540.14          8.450              8.860
25           07/25/06        08/25/06        141,061,928.86          8.302              8.860
26           08/25/06        09/25/06        136,475,603.73          8.614              8.860
</TABLE>

         1. With respect to any Distribution Date, if One-Month LIBOR (as
determined by the Cap Contract Counterparty and subject to a cap equal to
8.860%) exceeds the lower collar, the Trust Fund will receive payments pursuant
to the Cap Contract.

         Cap Contract Termination Date: The Distribution Date in September 2006.

         Certificate: Any one of the certificates of any Class executed by the
Trustee and authenticated by the Trustee in substantially the forms attached
hereto as Exhibits A.

         Certificate Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 3.05(f) in the name of the Trustee
for the benefit of the Certificateholders and designated "Wells Fargo Bank,
N.A., as trustee, in trust for registered holders of Merrill Lynch Mortgage
Investors Trust, Mortgage Loan Asset-Backed Certificates, Series 2004-HE1."
Funds in the Certificate Account shall be held in trust for the
Certificateholders for the uses and purposes set forth in this Agreement.

         Certificate Owner: With respect to a Book-Entry Certificate, the Person
that is the beneficial owner of such Book-Entry Certificate.

         Certificate Principal Balance: As to any Certificate and as of any
Distribution Date, the Initial Certificate Principal Balance of such Certificate
less the sum of (1) all amounts distributed with respect to such Certificate in
reduction of the Certificate Principal Balance thereof on previous Distribution
Dates pursuant to Section 4.04, and (2) any Applied Realized Loss Amounts
allocated to such Certificate on previous Distribution Dates pursuant to Section
4.04(i). On each Distribution Date, after all distributions of principal on such
Distribution Date, a portion of the Class C Interest Carry Forward Amount in an
amount equal to the excess of the Overcollateralization Amount on such
Distribution Date over the Overcollateralization Amount as of the preceding
Distribution Date (or, in the case of the first Distribution Date, the initial
Overcollateralization Amount (based on the Stated Principal Balance of the
Mortgage Loans as of the Cut-Off Date)) will be added to the aggregate
Certificate Principal Balance of the Class C Certificates (on a pro rata basis).
Notwithstanding the foregoing on any Distribution Date relating to a Due Period
in which a Subsequent Recovery has been received by the Servicer, the
Certificate Principal Balance of any Class of Certificates then outstanding for
which any Applied Realized Loss Amount has been allocated will be increased, in
order of seniority, by an amount equal to the lesser of (i) the Unpaid Realized
Loss Amount for such Class of Certificates and (ii) the total of any Subsequent
Recovery distributed on such date to the Certificateholders (reduced by the
amount of the increase in the Certificate Principal Balance of any more senior
Class of Certificates pursuant to this sentence on such Distribution Date).

         Certificate Register: The register maintained pursuant to Section 5.02
hereof.

         Certificateholder or Holder: The Person in whose name a Certificate is
registered in the Certificate Register (initially, Cede & Co., as nominee for
the Depository) in the case of any Class of Regular Certificates or the Class R
Certificate, except that solely for the purpose of giving any consent pursuant
to this Agreement, any Certificate registered in the name of the Depositor or
any Affiliate of the Depositor shall be deemed not to be Outstanding and the
Percentage Interest evidenced thereby shall not be taken into account in
determining whether the requisite amount of Percentage Interests necessary to
effect such consent has been obtained; provided, however, that if any such
Person (including the

                                       5
<PAGE>

Depositor) owns 100% of the Percentage Interests evidenced by a Class of
Certificates, such Certificates shall be deemed to be Outstanding for purposes
of any provision hereof that requires the consent of the Holders of Certificates
of a particular Class as a condition to the taking of any action hereunder. The
Trustee and the NIMs Insurer are entitled to rely conclusively on a
certification of the Depositor or any Affiliate of the Depositor in determining
which Certificates are registered in the name of an Affiliate of the Depositor.

         CIT: Collectively, CIT Group/Consumer Finance, Inc., a Delaware
corporation, CIT Group/Consumer Finance, Inc. (NY), a New York corporation, and
CIT Group/Consumer Finance, Inc. (TN), a Delaware corporation.

         CIT Bring Down Letter: That certain letter agreement, dated as of July
22, 2004, between MLMCI and CIT.

         CIT Transfer Agreement: The Master Mortgage Loan Purchase and Interim
Servicing Agreement, dated as of January 1, 2004, as amended, between MLMCI, as
initial purchaser and CIT, as seller and interim servicer, as supplemented by
the CIT Bring Down Letter.

         Class: All Certificates bearing the same Class designation as set forth
in Section 5.01 hereof.

         Class A Certificate Principal Balance: For any date of determination,
the sum of the Class A-1 Certificate Principal Balance, the Class R Certificate
Principal Balance and the Class A-2 Certificate Principal Balance.

         Class A Certificates: Any of the Class A-1 Certificates, the Class A-2
Certificates and the Class R Certificates.

         Class A Principal Distribution Amount: With respect to any Distribution
Date (1) prior to the Stepdown Date or any Distribution Date on which a Trigger
Event exists, 100% of the Principal Distribution Amount for such Distribution
Date and (2) on or after the Stepdown Date where a Trigger Event does not exist,
the excess of (A) the Class A Certificate Principal Balance immediately prior to
such Distribution Date over (B) the lesser of (i) 68.00% of the Stated Principal
Balance of the Mortgage Loans as of the end of the immediately preceding Due
Period and (ii) the excess of the Stated Principal Balance of the Mortgage Loans
as of the end of the immediately preceding Due Period over the Minimum Required
Overcollateralization Amount provided, however, that in no event will the Class
A Principal Distribution Amount with respect to any Distribution Date exceed the
aggregate Certificate Principal Balance of the Class A and Class R Certificates.

         Class A-1 Certificate: Any Certificate designated as a "Class A-1
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.

         Class A-1 Certificate Principal Balance: As of any date of
determination, the aggregate Certificate Principal Balance of the Class A-1
Certificates.

         Class A-1 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-1 Pass-Through Rate on
the Class A-1 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Current
Interest or a Class A-1 Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class A-1 Certificates. For
purposes of calculating interest, principal distributions on a Distribution Date
will be deemed to have been made on the first day of the Accrual Period in which
such Distribution Date occurs.

                                       6
<PAGE>

         Class A-1 Interest Carry Forward Amount: As of any Distribution Date,
the sum of (1) the excess of (A) the Class A-1 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
A-1 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class A-1 Pass-Through Rate for the related Accrual Period.

         Class A-1 Margin: As of any Distribution Date up to and including the
Optional Termination Date for the Certificates, 0.390% per annum and, as of any
Distribution Date after the Optional Termination Date, 0.780% per annum.

         Class A-1 Pass-Through Rate: For the first Distribution Date, 1.81625%
per annum. As of any Distribution Date thereafter, the least of (1) One-Month
LIBOR plus the Class A-1 Margin, (2) the Maximum Rate Cap and (3) the Available
Funds Cap for such Distribution Date.

         Class A-2 Certificate: Any Certificate designated as a "Class A-2
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.

         Class A-2 Certificate Principal Balance: As of any date of
determination, the aggregate Certificate Principal Balance of the Class A-2
Certificates.

         Class A-2 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class A-2 Pass-Through Rate on
the Class A-2 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Current
Interest or a Class A-2 Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class A-2 Certificates. For
purposes of calculating interest, principal distributions on a Distribution Date
will be deemed to have been made on the first day of the Accrual Period in which
such Distribution Date occurs.

         Class A-2 Interest Carry Forward Amount: As of any Distribution Date,
the sum of (1) the excess of (A) the Class A-2 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
A-2 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class A-2 Pass-Through Rate for the related Accrual Period.

         Class A-2 Margin: As of any Distribution Date up to and including the
Optional Termination Date for the Certificates, 0.390% per annum and, as of any
Distribution Date after the Optional Termination Date, 0.780% per annum.

         Class A-2 Pass-Through Rate: For the first Distribution Date, 1.81625%
per annum. As of any Distribution Date thereafter, the least of (1) One-Month
LIBOR plus the Class A-2 Margin, (2) the Maximum Rate Cap and (3) the Available
Funds Cap for such Distribution Date.

         Class B Certificates: Collectively, the Class B-1 Certificates, the
Class B-2 Certificates and the Class B-3 Certificates.

         Class B1R Interest: The sole class of "residual interest" in REMIC B1.

         Class B2R Interest: The sole class of "residual interest" in REMIC B2.

         Class B3R Interest: The sole class of "residual interest" in REMIC B3.

                                       7
<PAGE>

         Class B-1 Applied Realized Loss Amount: As of any Distribution Date,
the sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class B-1 Certificates.

         Class B-1 Certificate: Any Certificate designated as a "Class B-1
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.

         Class B-1 Certificate Principal Balance: As of any date of
determination, the aggregate Certificate Principal Balance of the Class B-1
Certificates.

         Class B-1 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-1 Pass-Through Rate on
the Class B-1 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Current
Interest or a Class B-1 Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class B-1 Certificates. For
purposes of calculating interest, principal distributions on a Distribution Date
will be deemed to have been made on the first day of the Accrual Period in which
such Distribution Date occurs.

         Class B-1 Interest Carry Forward Amount: As of any Distribution Date,
the sum of (1) the excess of (A) the Class B-1 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
B-1 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class B-1 Pass-Through Rate for the related Accrual Period.

         Class B-1 Margin: As of any Distribution Date up to and including the
Optional Termination Date for the Certificates, 2.3750% per annum and, as of any
Distribution Date after the Optional Termination Date, 3.5625% per annum.

         Class B-1 Pass-Through Rate: For the first Distribution Date, 3.80125%
per annum. As of any Distribution Date thereafter, the least of (1) One-Month
LIBOR plus the Class B-1 Margin, (2) the Maximum Rate Cap and (3) the Available
Funds Cap for such Distribution Date.

         Class B-1 Principal Distribution Amount: With respect to any
Distribution Date on or after the Stepdown Date, 100% of the Principal
Distribution Amount for such Distribution Date if the Class A Certificate
Principal Balance, the Class M-1 Certificate Principal Balance and the Class M-2
Certificate Principal Balance have been reduced to zero and a Trigger Event
exists, or as long as a Trigger Event does not exist, the excess of (1) the sum
of (A) the Class A Certificate Principal Balance (after taking into account
distributions of the Class A Principal Distribution Amount on such Distribution
Date), (B) the Class M-1 Certificate Principal Balance (after taking into
account distributions of the Class M-1 Principal Distribution Amount on such
Distribution Date), (C) the Class M-2 Certificate Principal Balance (after
taking into account distributions of the Class M-2 Principal Distribution Amount
on such Distribution Date) and (D) the Class B-1 Certificate Principal Balance
immediately prior to such Distribution Date over (2) the lesser of (A) 92.00% of
the Stated Principal Balance of the Mortgage Loans as of the end of the
immediately preceding Due Period and (B) the excess of the Stated Principal
Balance of the Mortgage Loans as of the end of the immediately preceding Due
Period over the Minimum Required Overcollateralization Amount. Notwithstanding
the foregoing, (I) on any Distribution Date prior to the Stepdown Date on which
the Certificate Principal Balance of each Class of Class A Certificates and
Class M Certificates has been reduced to zero, the Class B-1 Principal
Distribution Amount will equal the lesser of (x) the outstanding Certificate
Principal Balance of the Class B-1 Certificates and (y) 100% of the Principal
Distribution Amount remaining after any distributions on such Class A, Class M-1
and Class

                                       8
<PAGE>

M-2 Certificates and (II) in no event will the Class B-1 Principal Distribution
Amount with respect to any Distribution Date exceed the Class B-1 Certificate
Principal Balance.

         Class B-1 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class B-1 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class B-1 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class B-1 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."

         Class B-2 Applied Realized Loss Amount: As of any Distribution Date,
the sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class B-2 Certificates.

         Class B-2 Certificate: Any Certificate designated as a "Class B-2
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.

         Class B-2 Certificate Principal Balance: As of any date of
determination, the aggregate Certificate Principal Balance of the Class B-2
Certificates.

         Class B-2 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-2 Pass-Through Rate on
the Class B-2 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Current
Interest or a Class B-2 Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class B-2 Certificates. For
purposes of calculating interest, principal distributions on a Distribution Date
will be deemed to have been made on the first day of the Accrual Period in which
such Distribution Date occurs.

         Class B-2 Interest Carry Forward Amount: As of any Distribution Date,
the sum of (1) the excess of (A) the Class B-2 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
B-2 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class B-2 Pass-Through Rate for the related Accrual Period.

         Class B-2 Margin: As of any Distribution Date up to and including the
Optional Termination Date for the Certificates, 3.0000% per annum and, as of any
Distribution Date after the Optional Termination Date, 4.5000% per annum.

         Class B-2 Pass-Through Rate: For the first Distribution Date, 4.42625%
per annum. As of any Distribution Date thereafter, the least of (1) One-Month
LIBOR plus the Class B-2 Margin, (2) the Maximum Rate Cap and (3) the Available
Funds Cap for such Distribution Date.

         Class B-2 Principal Distribution Amount: With respect to any
Distribution Date on or after the Stepdown Date, 100% of the Principal
Distribution Amount for such Distribution Date if the Class A Certificate
Principal Balance, the Class M-1 Certificate Principal Balance, the Class M-2
Certificate Principal Balance and the Class B-1 Certificate Principal Balance
have been reduced to zero and a Trigger Event exists, or as long as a Trigger
Event does not exist, the excess of (1) the sum of (A) the Class A Certificate
Principal Balance (after taking into account distributions of the Class A
Principal Distribution Amount on such Distribution Date), (B) the Class M-1
Certificate Principal Balance (after taking into account distributions of the
Class M-1 Principal Distribution Amount on such Distribution Date), (C) the
Class M-2 Certificate Principal Balance (after taking into account distributions
of the Class M-2 Principal Distribution Amount on such Distribution Date), (D)
the Class B-1 Certificate Principal Balance (after

                                       9
<PAGE>

taking into account distributions of the Class B-1 Principal Distribution Amount
on such Distribution Date) and (E) the Class B-2 Certificate Principal Balance
immediately prior to such Distribution Date over (2) the lesser of (A) 95.00% of
the Stated Principal Balance of the Mortgage Loans as of the end of the
immediately preceding Due Period and (B) the excess of the Stated Principal
Balance of the Mortgage Loans as of the end of the immediately preceding Due
Period over the Minimum Required Overcollateralization Amount. Notwithstanding
the foregoing, (I) on any Distribution Date prior to the Stepdown Date on which
the Certificate Principal Balance of each Class of Class A, Class M and Class
B-1 Certificates has been reduced to zero, the Class B-2 Principal Distribution
Amount will equal the lesser of (x) the outstanding Certificate Principal
Balance of the Class B-2 Certificates and (y) 100% of the Principal Distribution
Amount remaining after any distributions on such Class A, Class M-1, Class M-2
and Class B-1 Certificates and (II) in no event will the Class B-2 Principal
Distribution Amount with respect to any Distribution Date exceed the Class B-2
Certificate Principal Balance.

         Class B-2 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class B-2 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class B-2 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class B-2 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."

         Class B-3 Applied Realized Loss Amount: As of any Distribution Date,
the sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class B-3 Certificates.

         Class B-3 Certificate: Any Certificate designated as a "Class B-3
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.

         Class B-3 Certificate Principal Balance: As of any date of
determination, the aggregate Certificate Principal Balance of the Class B-3
Certificates.

         Class B-3 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class B-3 Pass-Through Rate on
the Class B-3 Certificate Principal Balance as of such Distribution Date plus
the portion of any previous distributions on such Class in respect of Current
Interest or a Class B-3 Interest Carry Forward Amount that is recovered as a
voidable preference by a trustee in bankruptcy, less any Non-Supported Interest
Shortfall allocated on such Distribution Date to the Class B-3 Certificates. For
purposes of calculating interest, principal distributions on a Distribution Date
will be deemed to have been made on the first day of the Accrual Period in which
such Distribution Date occurs.

         Class B-3 Interest Carry Forward Amount: As of any Distribution Date,
the sum of (1) the excess of (A) the Class B-3 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
B-3 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class B-3 Pass-Through Rate for the related Accrual Period.

         Class B-3 Margin: As of any Distribution Date up to and including the
Optional Termination Date for the Certificates, 3.750% per annum and, as of any
Distribution Date after the Optional Termination Date, 5.625% per annum.

         Class B-3 Pass-Through Rate: For the first Distribution Date, 5.17625%
per annum. As of any Distribution Date thereafter, the least of (1) One-Month
LIBOR plus the Class B-3 Margin, (2) the Maximum Rate Cap and (3) the Available
Funds Cap for such Distribution Date.

                                       10
<PAGE>

         Class B-3 Principal Distribution Amount: With respect to any
Distribution Date on or after the Stepdown Date, 100% of the Principal
Distribution Amount for such Distribution Date if the Class A Certificate
Principal Balance, the Class M-1 Certificate Principal Balance, the Class M-2
Certificate Principal Balance, the Class B-1 Certificate Principal Balance and
the Class B-2 Certificate Principal Balance have been reduced to zero and a
Trigger Event exists, or as long as a Trigger Event does not exist, the excess
of (1) the sum of (A) the Class A Certificate Principal Balance (after taking
into account distributions of the Class A Principal Distribution Amount on such
Distribution Date), (B) the Class M-1 Certificate Principal Balance (after
taking into account distributions of the Class M-1 Principal Distribution Amount
on such Distribution Date), (C) the Class M-2 Certificate Principal Balance
(after taking into account distributions of the Class M-2 Principal Distribution
Amount on such Distribution Date), (D) the Class B-1 Certificate Principal
Balance (after taking into account distributions of the Class B-1 Principal
Distribution Amount on such Distribution Date), (E) the Class B-2 Certificate
Principal Balance (after taking into account distributions of the Class B-2
Principal Distribution Amount on such Distribution Date) and (F) the Class B-3
Certificate Principal Balance (after taking into account distributions of the
Class B-3 Principal Distribution Amount on such Distribution Date) over (2) the
lesser of (A) 96.50% of the Stated Principal Balance of the Mortgage Loans as of
the end of the immediately preceding Due Period and (B) the excess of the Stated
Principal Balance of the Mortgage Loans as of the end of the immediately
preceding Due Period over the Minimum Required Overcollateralization Amount.
Notwithstanding the foregoing, (I) on any Distribution Date prior to the
Stepdown Date on which the Certificate Principal Balance of each Class of Class
A, Class M, Class B-1 and Class B-2 Certificates has been reduced to zero, the
Class B-3 Principal Distribution Amount will equal the lesser of (x) the
outstanding Certificate Principal Balance of the Class B-3 Certificates and (y)
100% of the Principal Distribution Amount remaining after any distributions on
such Class A, Class M-1, Class M-2, Class B-1 and Class B-2 Certificates and
(II) in no event will the Class B-3 Principal Distribution Amount with respect
to any Distribution Date exceed the Class B-3 Certificate Principal Balance.

         Class B-3 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class B-3 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class B-3 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class B-3 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."

         Class C Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class C Certificates.

         Class C Certificate: Any Certificate designated as a "Class C
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.

         Class C Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class C Certificates.

         Class C Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class C Distributable Interest
Rate on a notional amount equal to the aggregate of the principal balance of the
Lower Tier REMIC Regular Interests immediately prior to such Distribution Date
(such amount of interest representing 100 percent of the interest payments on
the Class UTC Interest), plus the interest portion of any previous distributions
on such Class that is recovered as a voidable preference by a trustee in
bankruptcy, less any Non-Supported Interest Shortfall allocated on such
Distribution Date to the Class C Certificates.

         Class C Distributable Interest Rate: The excess, if any, of (a) the
weighted average of the interest rates on the Lower Tier REMIC Regular Interests
over (b) two times the weighted average of the interest

                                       11
<PAGE>

rates on the Lower Tier REMIC Regular Interests (treating for purposes of this
clause (b) the interest rate on each of the Lower Tier REMIC Marker Classes as
being capped at the interest rate of the Corresponding Middle Tier Interest and
treating the Class LTX Interest as being capped at zero). The averages described
in the preceding sentence shall be weighted on the basis of the respective
principal balances of the Lower Tier REMIC Regular Interests immediately prior
to any date of determination.

         Class C Interest Carry Forward Amount: As of any Distribution Date, the
excess of (A) the Class C Current Interest with respect to prior Distribution
Dates over (B) the amount actually distributed to the Class C Certificates with
respect to interest on such prior Distribution Dates or added to the aggregate
Certificate Principal Balance of the Class C Certificates.

         Class CR Interest: The sole class of "residual interest" in REMIC C.

         Class C Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class C Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class C Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class C Certificates pursuant to the last sentence of
the definition of "Certificate Principal Balance."

         Class LTA-1 Interest: An uncertificated regular interest in the Lower
Tier REMIC with an initial principal balance equal to -1/2 of the initial
principal balance of its Corresponding Middle Tier Interests and an interest
rate equal to the Net Rate.

         Class LTA-2 Interest: An uncertificated regular interest in the Lower
Tier REMIC with an initial principal balance equal to -1/2 of the initial
principal balance of its Corresponding Middle Tier Interest and an interest rate
equal to the Net Rate.

         Class LTB-1 Interest: An uncertificated regular interest in the Lower
Tier REMIC with an initial principal balance equal to -1/2 of the initial
principal balance of its Corresponding Middle Tier Interest and an interest rate
equal to the Net Rate.

         Class LTB-2 Interest: An uncertificated regular interest in the Lower
Tier REMIC with an initial principal balance equal to -1/2 of the initial
principal balance of its Corresponding Middle Tier Interest and an interest rate
equal to the Net Rate.

         Class LTB-3 Interest: An uncertificated regular interest in the Lower
Tier REMIC with an initial principal balance equal to -1/2 of the initial
principal balance of its Corresponding Middle Tier Interest and an interest rate
equal to the Net Rate.

         Class LTM-1 Interest: An uncertificated regular interest in the Lower
Tier REMIC with an initial principal balance equal to -1/2 of the initial
principal balance of its Corresponding Middle Tier Interest and an interest rate
equal to the Net Rate.

         Class LTM-2 Interest: An uncertificated regular interest in the Lower
Tier REMIC with an initial principal balance equal to -1/2 of the initial
principal balance of its Corresponding Middle Tier Interest and an interest rate
equal to the Net Rate.

         Class LTR Interest: The sole class of "residual interest" in the Lower
Tier REMIC.

         Class LTX Interest: An uncertificated regular interest in the Lower
Tier REMIC with an initial principal balance equal to the excess of (i) the
aggregate Cut-off Date Principal Balance of the Mortgage

                                       12
<PAGE>

Loans over (ii) the aggregate initial principal balance of the Lower Tier REMIC
Marker Classes and an interest rate equal to the Net Rate.

         Class M Certificates:  Any of the Class M-1 and Class M-2 Certificates.

         Class M-1 Applied Realized Loss Amount: As of any Distribution Date,
the sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class M-1 Certificates.

         Class M-1 Certificate: Any Certificate designated as a "Class M-1
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.

         Class M-1 Certificate Principal Balance: As of any date of
determination, the aggregate Certificate Principal Balance of the Class M-1
Certificates.

         Class M-1 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-1 Pass-Through Rate on
the Class M-1 Certificate Principal Balance as of the first day of such Accrual
Period (after giving effect to all distributions of principal made or deemed to
be made as of such first day) plus the portion of any previous distributions on
such Class in respect of Current Interests or a Class M-1 Interest Carry Forward
Amount that is recovered as a voidable preference by a trustee in bankruptcy,
less any Non-Supported Interest Shortfall allocated on such Distribution Date to
the Class M-1 Certificates. For purposes of calculating interest, principal
distributions on a Distribution Date will be deemed to have been made on the
first day of the Accrual Period in which such Distribution Carry Forward Date
occurs.

         Class M-1 Interest Carry Forward Amount: As of any Distribution Date,
the sum of (1) the excess of (A) the Class M-1 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
M-1 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class M-1 Pass-Through Rate for the related Accrual Period.

         Class M-1 Margin: As of any Distribution Date up to and including the
Optional Termination Date for the Certificates, 0.700% per annum and, as of any
Distribution Date after the Optional Termination Date, 1.050% per annum.

         Class M-1 Pass-Through Rate: For the first Distribution Date, 2.12625%
per annum. As of any Distribution Date thereafter, the least of (1) One-Month
LIBOR plus the Class M-1 Margin, (2) the Maximum Rate Cap and (3) the Available
Funds Cap for such Distribution Date.

         Class M-1 Principal Distribution Amount: With respect to any
Distribution Date on or after the Stepdown Date, 100% of the Principal
Distribution Amount for such Distribution Date if the aggregate Class A
Certificate Principal Balance has been reduced to zero and a Trigger Event
exists, or as long as a Trigger Event does not exist, the excess of (1) the sum
of (A) the Class A Certificate Principal Balance (after taking into account
distributions of the Class A Principal Distribution Amount on such Distribution
Date) and (B) the Class M-1 Certificate Principal Balance immediately prior to
such Distribution Date over (2) the lesser of (A) 82.50% of the Stated Principal
Balances of the Mortgage Loans as of the end of the immediately preceding Due
Period and (B) the excess of the Stated Principal Balances for the Mortgage
Loans as of the end of the immediately preceding Due Period over the Minimum
Required Overcollateralization Amount. Notwithstanding the foregoing, (I) on any
Distribution Date prior to the Stepdown Date on which the Certificate Principal
Balance of each Class of Class A Certificates has been reduced to zero, the
Class M-1 Principal Distribution Amount will equal the lesser of (x) the
outstanding Certificate Principal Balance of the Class M-1 Certificates and (y)
100% of the Principal Distribution

                                       13
<PAGE>

Amount remaining after any distributions on such Class A Certificates and (II)
in no event will the Class M-1 Principal Distribution Amount with respect to any
Distribution Date exceed the Class M-1 Certificate Principal Balance.

         Class M-1 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-1 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class M-1 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class M-1 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."

         Class M-2 Applied Realized Loss Amount: As of any Distribution Date,
the sum of all Applied Realized Loss Amounts with respect to the Mortgage Loans
which have been applied to the reduction of the Certificate Principal Balance of
the Class M-2 Certificates.

         Class M-2 Certificate: Any Certificate designated as a "Class M-2
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.

         Class M-2 Certificate Principal Balance: As of any date of
determination, the aggregate Certificate Principal Balance of the Class M-2
Certificates.

         Class M-2 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class M-2 Pass-Through Rate on
the Class M-2 Certificate Principal Balance as of the first day of such Accrual
Period (after giving effect to all distributions of principal made or deemed to
be made as of such first day) plus the portion of any previous distributions on
such Class in respect of Current Interest or a Class M-2 Interest Carry Forward
Amount that is recovered as a voidable preference by a trustee in bankruptcy,
less any Non-Supported Interest Shortfall allocated on such Distribution Date to
the Class M-2 Certificates. For purposes of calculating interest, principal
distributions on a Distribution Date will be deemed to have been made on the
first day of the Accrual Period in which such Distribution Date occurs.

         Class M-2 Interest Carry Forward Amount: As of any Distribution Date,
the sum of (1) the excess of (A) the Class M-2 Current Interest with respect to
prior Distribution Dates over (B) the amount actually distributed to the Class
M-2 Certificates with respect to interest on such prior Distribution Dates and
(2) interest on such excess (to the extent permitted by applicable law) at the
Class M-2 Pass-Through Rate for the related Accrual Period.

         Class M-2 Margin: As of any Distribution Date up to and including the
Optional Termination Date for the Certificates, 1.500% per annum and, as of any
Distribution Date after the Optional Termination Date, 2.250% per annum.

         Class M-2 Pass-Through Rate: For the first Distribution Date, 2.92625%
per annum. As of any Distribution Date thereafter, the least of (1) One-Month
LIBOR plus the Class M-2 Margin, (2) the Maximum Rate Cap and (3) the Available
Funds Cap for such Distribution Date.

         Class M-2 Principal Distribution Amount: With respect to any
Distribution Date on or after the Stepdown Date, 100% of the Principal
Distribution Amount for such Distribution Date if the Class A Certificate
Principal Balance and the Class M-1 Certificate Principal Balance have been
reduced to zero and a Trigger Event exists, or as long as a Trigger Event does
not exist, the excess of (1) the sum of (A) the Class A Certificate Principal
Balance (after taking into account distributions of the Class A Principal
Distribution Amount on such Distribution Date), (B) the Class M-1 Certificate
Principal Balance (after taking into account distributions of the Class M-1
Principal Distribution Amount on such Distribution Date) and (C) the Class M-2
Certificate Principal Balance immediately prior to such

                                       14
<PAGE>

Distribution Date over (2) the lesser of (A) 89.50% of the Stated Principal
Balances of the Mortgage Loans as of the end of the immediately preceding Due
Period and (B) the excess of the Stated Principal Balances of the Mortgage Loans
as of the end of the immediately preceding Due Period over the Minimum Required
Overcollateralization Amount. Notwithstanding the foregoing, (I) on any
Distribution Date prior to the Stepdown Date on which the Certificate Principal
Balance of each Class of Class A Certificates and the Class M-1 Certificates has
been reduced to zero, the Class M-2 Principal Distribution Amount will equal the
lesser of (x) the outstanding Certificate Principal Balance of the Class M-2
Certificates and (y) 100% of the Principal Distribution Amount remaining after
any distributions on such Class A and Class M-1 Certificates and (II) in no
event will the Class M-2 Principal Distribution Amount with respect to any
Distribution Date exceed the Class M-2 Certificate Principal Balance.

         Class M-2 Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (1) the Class M-2 Applied Realized Loss Amount over (2) the sum of (x)
all distributions in reduction of the Class M-2 Unpaid Realized Loss Amounts on
all previous Distribution Dates and (y) all increases in the Certificate
Principal Balance of such Class M-2 Certificates pursuant to the last sentence
of the definition of "Certificate Principal Balance."

         Class MTA-1 Interest: An uncertificated regular interest in the Middle
Tier REMIC with an initial principal balance equal to the initial principal
balance of the Related Certificates and bearing interest at the lesser of (i)
the greater of (x) One-Month LIBOR plus the Class A-1 Margin and (y) 2.00% plus
the Class A-1 Margin and (ii) the Net Rate. Notwithstanding the foregoing, for
the first Distribution Date, the percentage described in clause (i) of the
preceding sentence shall be multiplied by a fraction, the numerator of which is
the actual number of days in the Accrual Period for the Related Certificates and
the denominator of which is 30.

         Class MTA-2 Interest: An uncertificated regular interest in the Middle
Tier REMIC with an initial principal balance equal to the initial principal
balance of the Related Certificates and bearing interest at the lesser of (i)
the greater of (x) One-Month LIBOR plus the Class A-2 Margin and (y) 2.00% plus
the Class A-2 Margin and (ii) the Net Rate. Notwithstanding the foregoing, for
the first Distribution Date, the percentage described in clause (i) of the
preceding sentence shall be multiplied by a fraction, the numerator of which is
the actual number of days in the Accrual Period for the Related Certificates and
the denominator of which is 30.

         Class MTB-1 Interest: An uncertificated regular interest in the Middle
Tier REMIC with an initial principal balance equal to the initial principal
balance of the Related Certificates and bearing interest at the lesser of (i)
the greater of (x) One-Month LIBOR plus the Class B-1 Margin and (y) 2.00% plus
the Class B-1 Margin and (ii) the Net Rate. Notwithstanding the foregoing, for
the first Distribution Date, the percentage described in clause (i) of the
preceding sentence shall be multiplied by a fraction, the numerator of which is
the actual number of days in the Accrual Period for the Related Certificates and
the denominator of which is 30.

         Class MTB-2 Interest: An uncertificated regular interest in the Middle
Tier REMIC with an initial principal balance equal to the initial principal
balance of the Related Certificates and bearing interest at the lesser of (i)
the greater of (x) One-Month LIBOR plus the Class B-2 Margin and (y) 2.00% plus
the Class B-2 Margin and (ii) the Net Rate. Notwithstanding the foregoing, for
the first Distribution Date, the percentage described in clause (i) of the
preceding sentence shall be multiplied by a fraction, the numerator of which is
the actual number of days in the Accrual Period for the Related Certificates and
the denominator of which is 30.

         Class MTB-3 Interest: An uncertificated regular interest in the Middle
Tier REMIC with an initial principal balance equal to the initial principal
balance of the Related Certificates and bearing interest at the lesser of (i)
the greater of (x) One-Month LIBOR plus the Class B-3 Margin and (y) 2.00%

                                       15
<PAGE>

plus the Class B-3 Margin and (ii) the Net Rate. Notwithstanding the foregoing,
for the first Distribution Date, the percentage described in clause (i) of the
preceding sentence shall be multiplied by a fraction, the numerator of which is
the actual number of days in the Accrual Period for the Related Certificates and
the denominator of which is 30.

         Class MTC Interest: An uncertificated regular interest in the Middle
Tier REMIC with an initial principal balance equal to the excess of the
principal balance of the Mortgage Loans over the aggregate Certificate Principal
Balance of the Class A-1 Certificates, Class A-2 Certificates, Class B-1
Certificates, Class B-2 Certificates, Class B-3 Certificates, Class M-1
Certificates, Class M-2 Certificates and Class R Certificates and bearing
interest on a notional amount equal to the aggregate of the Principal Balances
of the Mortgage Loans outstanding as of the beginning of the related Accrual
Period at a rate equal to the Class MTC Interest Rate.

         Class MTC Interest Rate: The excess, if any, of (a) the weighted
average of the interest rates on the Lower Tier REMIC Regular Interests over (b)
two times the weighted average of the interest rates on the Lower Tier REMIC
Regular Interests (treating for purposes of this clause (b) the interest rate on
each of the Lower Tier REMIC Marker Classes as being capped at the interest rate
on the Corresponding Middle Tier Interest and treating the Class LTX Interest as
being capped at zero). The weighted averages described in the preceding sentence
shall be weighted on the basis of the respective principal balances of the Lower
Tier REMIC Regular Interests immediately prior to any date of determination.

         Class MTM-1 Interest: An uncertificated regular interest in the Middle
Tier REMIC with an initial principal balance equal to the initial principal
balance of the Related Certificates and bearing interest at the lesser of (i)
the greater of (x) One-Month LIBOR plus the Class M-1 Margin and (y) 2.00% plus
the Class M-1 Margin and (ii) the Net Rate. Notwithstanding the foregoing, for
the first Distribution Date, the percentage described in clause (i) of the
preceding sentence shall be multiplied by a fraction, the numerator of which is
the actual number of days in the Accrual Period for the Related Certificates and
the denominator of which is 30.

         Class MTM-2 Interest: An uncertificated regular interest in the Middle
Tier REMIC with an initial principal balance equal to the initial principal
balance of the Related Certificates and bearing interest at the lesser of (i)
the greater of (x) One-Month LIBOR plus the Class M-2 Margin and (y) 2.00% plus
the Class M-2 Margin and (ii) the Net Rate. Notwithstanding the foregoing, for
the first Distribution Date, the percentage described in clause (i) of the
preceding sentence shall be multiplied by a fraction, the numerator of which is
the actual number of days in the Accrual Period for the Related Certificates and
the denominator of which is 30.

         Class MTR Interest: The sole class of "residual interest" in the Middle
Tier REMIC, as described in the Preliminary Statement and Section 2.07.

         Class P Certificate: Any Certificate designated as a Class P
Certificate on the face thereof, executed by the Trustee and authenticated by
the Trustee in substantially the form set forth in Exhibit A, representing the
right to distributions as set forth herein.

         Class R Certificate: The Class R Certificate executed by the Trustee
and authenticated by the Trustee in substantially the form set forth in Exhibit
A.

         Class R Certificate Principal Balance: As of any date of determination,
the aggregate Certificate Principal Balance of the Class R Certificate.

         Class R Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class R Pass-Through Rate on
the Class R Certificate Principal Balance as of the

                                       16
<PAGE>

first day of such Accrual Period (after giving effect to all distributions of
principal made or deemed to be made as of such first day) plus the portion of
any previous distributions on such Class in respect of Class R Current Interest
or a Class R Interest Carry Forward Amount that is recovered as a voidable
preference by a trustee in bankruptcy, less any Non-Supported Interest Shortfall
allocated on such Distribution Date to the Class R Certificate. For purposes of
calculating interest, principal distributions on a Distribution Date will be
deemed to have been made on the first day of the Accrual Period in which such
Distribution Date occurs.

         Class R Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class R Current Interest with respect to prior
Distribution Dates over (B) the amount actually distributed to the Class R
Certificate with respect to interest on such prior Distribution Dates and (2)
interest on such excess (to the extent permitted by applicable law) at the Class
R Pass-Through Rate for the related Accrual Period.

         Class R Margin: As of any Distribution Date up to and including the
Optional Termination Date for the Certificates, 0.390% per annum and, as of any
Distribution Date after the Optional Termination Date, 0.780% per annum.

         Class R Pass-Through Rate: For the first Distribution Date, 1.81625%
per annum. As of any Distribution Date thereafter, the least of (1) One-Month
LIBOR plus the Class R Margin, (2) the Maximum Rate Cap and (3) the Available
Funds Cap for such Distribution Date.

         Class R-X Certificate: The Class R-X Certificate executed by the
Trustee and authenticated by the Trustee in substantially the form set forth in
Exhibit A.

         Class S Certificate: Any Certificate designated as a "Class S
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein. For federal income tax purposes,
the Class S Certificates represent each of the UTS Components each of which is a
"regular interest" in the Upper Tier REMIC.

         Class S Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class S Pass-Through Rate on
the Class S Notional Amount for such Distribution Date plus the portion of any
previous distributions on such Class in respect of Current Interest or an
Interest Carry Forward Amount that is recovered as a voidable preference by a
trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated on
such Distribution Date to the Class S Certificates.

         Class S Interest Carry Forward Amount: As of any Distribution Date, the
sum of (1) the excess of (A) the Class S Current Interest with respect to prior
Distribution Dates over (B) the amount actually distributed to the Class S
Certificate with respect to interest on such prior Distribution Dates and (2)
interest on such excess (to the extent permitted by applicable law) at the Class
S Pass-Through Rate for the related Accrual Period.

         Class S Notional Amount: For any Distribution Date, the aggregate
Certificate Principal Balance of the Class A, Class M and Class B Certificates
for such Distribution Date.

         Class S Pass-Through Rate: As of any Distribution Date, the greater of
(1) 2.00% minus One-Month LIBOR and (2) 0.00%; provided, however, where 2.00%
exceeds One-Month LIBOR for a Distribution Date, the rate on the Class S
Certificates with respect to the portion of the notional balance of the Class S
Certificates that corresponds to each Class of the Class A, Class M and Class B
Certificates will be subject to a cap equal to the excess of (I) the product of
(x) the Net WAC and (y) a fraction, the numerator of which is 30 and the
denominator of which is the actual number of days in the related Accrual Period
over (II) One-Month LIBOR plus the applicable margin for such Class of
Certificates.

                                       17
<PAGE>

         Class UTB1 Interest: An uncertificated "regular interest" in the Upper
Tier REMIC having the same rights to payments as the Class B-1 Certificates
other than the right to any payments in respect of Excess Interest.

         Class UTB2 Interest: An uncertificated "regular interest" in the Upper
Tier REMIC having the same rights to payments as the Class B-2 Certificates
other than the right to any payments in respect of Excess Interest.

         Class UTB3 Interest: An uncertificated "regular interest" in the Upper
Tier REMIC having the same rights to payments as the Class B-3 Certificates
other than the right to any payments in respect of Excess Interest.

         Class UTC Interest: An uncertificated "regular interest" in the Upper
Tier REMIC having the same rights to payments as the Uncertificated Class C
Interest.

         Closing Date:  July 22, 2004.

         Code: The Internal Revenue Code of 1986, including any successor or
amendatory provisions.

         Collection Account: The separate Eligible Account created and initially
maintained by the Servicer pursuant to Section 3.05(b) in the name of the
Trustee for the benefit of the Certificateholders and designated "Litton Loan
Servicing LP, as Servicer for Wells Fargo Bank, N.A., as Trustee in trust for
registered holders of Merrill Lynch Mortgage Investors Trust, Mortgage Loan
Asset-Backed Certificates, Series 2004-HE1". Funds in the Collection Account
shall be held in trust for the Certificateholders for the uses and purposes set
forth in this Agreement.

         Combined Loan-to-Value Ratio: For any Mortgage Loan in a second lien
position, the fraction, expressed as a percentage, the numerator of which is the
sum of (1) the original principal balance of the related Mortgage Loan and (2)
any outstanding principal balances of Mortgage Loans the liens on which are
senior to the lien on such related Mortgage Loan (such sum calculated at the
date of origination of such related Mortgage Loan) and the denominator of which
is the lesser of (A) the Appraised Value of the related Mortgaged Property (or
applicable dwelling unit, in the case of a Co-op Loan) and (B) the sales price
of the related Mortgaged Property (or applicable dwelling unit, in the case of a
Co-op Loan) at time of origination.

         Compensating Interest: With respect to any Mortgage Loan and any
Distribution Date, an amount equal to the portion of any Prepayment Interest
Shortfalls required to be deposited in the Collection Account by the Servicer
pursuant to Section 4.02 hereof.

         Condemnation Proceeds: All awards or settlements in respect of a
Mortgaged Property (or Underlying Mortgaged Property, in the case of a Co-op
Loan), whether permanent or temporary, partial or entire, by exercise of the
power of eminent domain or condemnation, to the extent not required to be
released either to a Mortgagor in accordance with the terms of the related
mortgage loan documents or to the holder of a senior lien on the Mortgaged
Property (or Underlying Mortgaged Property, in the case of a Co-op Loan).

         Co-op Lease: With respect to a Co-op Loan, the lease with respect to a
dwelling unit occupied by the Mortgagor and relating to the stock allocated to
the related dwelling unit.

         Co-op Loan: A Mortgage Loan secured by the pledge of stock allocated to
a dwelling unit in a residential cooperative housing corporation and a
collateral assignment of the related Co-op Lease.

                                       18
<PAGE>

         Corresponding Middle Tier Interests: With respect to the Class LTA-1
Interest, the Class MTA-1 Interest. With respect to the Class LTA-2 Interest,
the Class MTA-2 Interest. With respect to the Class LTM-1 Interest, the Class
MTM-1 Interest. With respect to the Class LTM-2 Interest, the Class MTM-2
Interest. With respect to the Class LTB-1 Interest, the Class MTB-1 Interest.
With respect to the Class LTB-2 Interest, the Class MTB-2 Interest. With respect
to the Class LTB-3 Interest, the Class MTB-3 Interest.

         Current Interest: Any of the Class A-1 Current Interest, the Class A-2
Current Interest, the Class R Current Interest, the Class M-1 Current Interest,
the Class M-2 Current Interest, the Class B-1 Current Interest, Class B-2
Current Interest, the Class B-3 Current Interest, the Class C Current Interest
and the Class S Current Interest.

         Cut-off Date:  July 1, 2004.

         Cut-off Date Principal Balance: As to any Mortgage Loan, the unpaid
principal balance thereof as of the close of business on the calendar day
immediately preceding the Cut-off Date after application of all payments of
principal due on or prior to the Cut-off Date, whether or not received, and all
Principal Prepayments received prior to the Cut-off Date, but without giving
effect to any installments of principal received in respect of Due Dates on and
after the Cut-off Date.

         C REMIC: As described in the Preliminary Statement and Section 2.07.

         Definitive Certificates:  As defined in Section 5.06.

         Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced by a
Replacement Mortgage Loan.

         Delinquent: A Mortgage Loan is "delinquent" if any payment due thereon
is not made pursuant to the terms of such Mortgage Loan by the close of business
on the day such payment is scheduled to be due. A Mortgage Loan is "30 days
delinquent" if such payment has not been received by the close of business on
the corresponding day of the month immediately succeeding the month in which
such payment was due, or, if there is no such corresponding day (e.g., as when a
30-day month follows a 31-day month in which a payment was due on the 31st day
of such month), then on the last day of such immediately succeeding month.
Similarly for "60 days delinquent," "90 days delinquent" and so on.

         Denomination: With respect to each Certificate, the amount set forth on
the face thereof as the "Initial Principal Balance of this Certificate."

         Depositor: Merrill Lynch Mortgage Investors, Inc., a Delaware
corporation, or its successor in interest.

         Depository: The initial Depository shall be The Depository Trust
Company ("DTC"), the nominee of which is Cede & Co., or any other organization
registered as a "clearing agency" pursuant to Section 17A of the Securities
Exchange Act of 1934, as amended. The Depository shall initially be the
registered Holder of the Book-Entry Certificates. The Depository shall at all
times be a "clearing corporation" as defined in Section 8-102(3) of the Uniform
Commercial Code of the State of New York.

         Depository Agreement: With respect to Classes of Book-Entry
Certificates, the agreement between the Trustee and the initial Depository.

                                       19
<PAGE>

         Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.

         Designated Transaction: A transaction in which the assets underlying
the Certificates consist of single-family residential, multi-family residential,
home equity, manufactured housing and/or commercial mortgage obligations that
are secured by single-family residential, multi-family residential, commercial
real property or leasehold interests therein.

         Determination Date: With respect to any Distribution Date, the 15th day
of the month of such Distribution Date or, if such 15th day is not a Business
Day, the immediately preceding Business Day.

         Disqualified Organization: (1) the United States, any state or
political subdivision thereof, any foreign government, any international
organization, or any agency or instrumentality of any of the foregoing, (2) any
organization (other than a cooperative described in Section 521 of the Code)
which is exempt from tax under Chapter 1 of Subtitle A of the Code unless such
organization is subject to the tax imposed by Section 511 of the Code and (3)
any organization described in Section 1381(a)(2)(C) of the Code.

         Distribution Date: The 25th day of each calendar month, or if such 25th
day is not a Business Day, the next succeeding Business Day, commencing in
August 2004.

         Due Date: With respect to any Distribution Date and any Mortgage Loan,
the day during the related Due Period on which a Scheduled Payment is due.

         Due Period: With respect to any Distribution Date, the period beginning
on the second day of the calendar month preceding the calendar month in which
such Distribution Date occurs and ending on the first day of the month in which
such Distribution Date occurs.

         Eligible Account: An account that is (i) maintained with a depository
institution the long-term unsecured debt obligations of which are rated by each
Rating Agency in one of its two highest rating categories, or (ii) maintained
with the corporate trust department of a bank which (A) has a rating of at least
Baa3 or P-3 by Moody's and (B) is either the Depositor or the corporate trust
department of a national bank or banking corporation which has a rating of at
least A-1 by S&P or F1 by Fitch, or (iii) an account or accounts the deposits in
which are fully insured by the FDIC, or (iv) an account or accounts, acceptable
to each Rating Agency without reduction or withdrawal of the rating of any Class
of Certificates, as evidenced in writing, by a depository institution in which
such accounts are insured by the FDIC (to the limit established by the FDIC),
the uninsured deposits in which accounts are otherwise secured such that, as
evidenced by an Opinion of Counsel delivered to and acceptable to the Trustee,
the NIMs Insurer and each Rating Agency, the Certificateholders have a claim
with respect to the funds in such account and a perfected first security
interest against any collateral (which shall be limited to Permitted
Investments) securing such funds that is superior to claims of any other
depositors or creditors of the depository institution with which such account is
maintained, or (v) maintained at an eligible institution whose commercial paper,
short-term debt or other short-term deposits are rated at least A-1+ by S&P and
F-1+ by Fitch, or (vi) maintained with a federal or state chartered depository
institution the deposits in which are insured by the FDIC to the applicable
limits and the short-term unsecured debt obligations of which (or, in the case
of a depository institution that is a subsidiary of a holding company, the
short-term unsecured debt obligations of such holding company) are rated A-1 by
S&P or Prime-1 by Moody's at the time any deposits are held on deposit therein,
or (vii) a segregated trust account or accounts maintained with a federal or
state chartered depository institution or trust company acting in its fiduciary
capacity, that is acceptable to the Rating Agencies, or (viii) otherwise
acceptable to each Rating Agency, as evidenced by a letter from each Rating
Agency to the Trustee and the NIMs Insurer.

                                       20
<PAGE>

         ERISA: The Employee Retirement Income Security Act of 1974, including
any successor or amendatory provisions.

         ERISA Restricted Certificate: The Class C Certificates, Class P
Certificates, Class R Certificate and Class R-X Certificate and any other
Certificate, unless such other Certificate shall have received a rating from a
Rating Agency at the time of a transfer of such other Certificate that is in one
of the three (or in the case of Designated Transactions, four) highest generic
rating categories.

         Event of Default:  As defined in Section 7.01 hereof.

         Excess Interest: On any Distribution Date, for the Class A-1
Certificates, Class A-2 Certificates, Class R Certificate, Class M-1
Certificates, Class M-2 Certificates, Class B-1 Certificates, Class B-2
Certificates and Class B-3 Certificates, the excess, if any, of (1) the amount
of interest such Class of Certificates is entitled to receive on such
Distribution Date at its Pass-Through Rate over (2) the amount of interest such
Class of Certificates would have been entitled to receive on such Distribution
Date had the Pass-Through Rate for such Class been the REMIC Pass-Through Rate.

         Excess Proceeds: With respect to any Liquidated Loan, any Liquidation
Proceeds that are in excess of the sum of (1) the unpaid principal balance of
such Liquidated Loan as of the date of such liquidation plus (2) interest at the
Mortgage Rate from the Due Date as to which interest was last paid or advanced
to Certificateholders (and not reimbursed to the Servicer) up to the Due Date in
the month in which such Liquidation Proceeds are required to be distributed on
the unpaid principal balance of such Liquidated Loan outstanding during each Due
Period as to which such interest was not paid or advanced.

         Exchange Act:  The Securities Exchange Act of 1934, as amended.

         Extra Principal Distribution Amount: With respect to any Distribution
Date, (1) prior to the Stepdown Date, the excess of (A) the sum of (i) the
Aggregate Certificate Principal Balance immediately preceding such Distribution
Date reduced by the Principal Funds with respect to such Distribution Date and
(ii) $5,346,822 over (B) the Pool Stated Principal Balance of the Mortgage Loans
as of the end of the immediately preceding Due Period and (2) on and after the
Stepdown Date, (A) the sum of (i) the Aggregate Certificate Principal Balance
immediately preceding such Distribution Date, reduced by the Principal Funds
with respect to such Distribution Date and (ii) the greater of (a) 3.50% of the
Pool Stated Principal Balance of the Mortgage Loans and (b) the Minimum Required
Overcollateralization Amount less (B) the Pool Stated Principal Balance of the
Mortgage Loans as of the end of the immediately preceding Due Period; provided,
however, that if on any Distribution Date a Trigger Event is in effect, the
Extra Principal Distribution Amount will not be reduced to the applicable
percentage of the then-current Pool Stated Principal Balance of the Mortgage
Loans as of the Due Date immediately prior to the Trigger Event until the next
Distribution Date on which the Trigger Event is not in effect.

         Fannie Mae: A federally chartered and privately owned corporation
organized and existing under the Federal National Mortgage Association Charter
Act, or any successor thereto.

         FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.

         Fieldstone:  Fieldstone Mortgage Company.

         Fieldstone Bring Down Letter: That certain letter agreement, dated as
of July 22, 2004, between MLMCI and Fieldstone.

                                       21
<PAGE>

         Fieldstone Transfer Agreement: The Master Mortgage Loan Purchase and
Interim Servicing Agreement, dated as of March 1, 2004, between MLMCI, as
initial purchaser and Fieldstone, as Seller and interim servicer, as
supplemented by the Fieldstone Bring Down Letter.

         Fitch:  Fitch, Inc., or any successor in interest.

         Fixed Rate Mortgage Loan: A Mortgage Loan identified in the Mortgage
Loan Schedule as having a Mortgage Rate which is fixed.

         Floating Rate Certificate Carryover: With respect to a Distribution
Date, in the event that the Pass-Through Rate for a Class of the Class A, Class
M or Class B Certificates is based upon the Available Funds Cap or the Maximum
Rate Cap, the excess of (x) the amount of interest that such Class would have
been entitled to receive on such Distribution Date had the Pass-Through Rate for
that Class not been calculated based on the Available Funds Cap or the Maximum
Rate Cap, up to but not exceeding the greater of (a) the Maximum Rate Cap or (b)
the Upper Collar over (y) the amount of interest payable on such Class on such
Distribution Date based on the lesser of (i) the Available Funds Cap and (ii)
the Maximum Rate Cap, together with (i) the unpaid portion of any such excess
from prior Distribution Dates (and interest accrued thereon at the then
applicable Pass-Through Rate for such Class, without giving effect to the
Available Funds Cap) and (ii) any amount previously distributed with respect to
Floating Rate Certificate Carryover for such Class that is recovered as a
voidable preference by a trustee in bankruptcy.

         Freddie Mac: A corporate instrumentality of the United States created
and existing under Title III of the Emergency Home Finance Act of 1970, as
amended, or any successor thereto.

         Grantor Trusts:  The grantor trusts described in Section 2.07 hereof.

         Gross Margin: The percentage set forth in the related Mortgage Note for
each of the Adjustable Rate Mortgage Loans which is to be added to the
applicable index for use in determining the Mortgage Rate on each Adjustment
Date, and which is set forth in the Mortgage Loan Schedule for each Adjustable
Rate Mortgage Loan.

         Group A Mortgage Loan: Any Mortgage Loan identified in the Group A
Mortgage Loan Schedule attached hereto as Exhibit B-2.

         Group A Principal Distribution Amount: As of any Distribution Date, the
amount equal to the lesser of (1) the sum of the respective Certificate
Principal Balances of the Class A-1 and Class R Certificates and (2) the product
of (x) the Group A Principal Distribution Percentage and (y) the Class A
Principal Distribution Amount; provided, however, that (A) with respect to the
Distribution Date on which the Certificate Principal Balance of each Class of
the Class A-2 Certificates is initially reduced to zero (so long as the Class
A-1 Certificates are outstanding), the Group B Principal Distribution Percentage
of the Class A Principal Distribution Amount in excess of the amount necessary
to reduce the Certificate Principal Balance of each of the Class A-2
Certificates to zero will be added to the Group A Principal Distribution Amount
and (B) with respect to any Distribution Date thereafter, the Group A Principal
Distribution Amount shall equal the Class A Principal Distribution Amount.

         Group A Principal Distribution Percentage: With respect to any
Distribution Date, a fraction expressed as a percentage, the numerator of which
is the amount of Principal Funds with respect to such Distribution Date received
with respect to Group A Mortgage Loans, and the denominator of which is the
amount of all Principal Funds with respect to such Distribution Date received on
all the Mortgage Loans.

                                       22
<PAGE>

         Group B Mortgage Loan: Any Mortgage Loan identified in the Group B
Mortgage Loan Schedule attached hereto as Exhibit B-3.

         Group B Principal Distribution Amount: As of any Distribution Date, the
amount equal to the lesser of (1) the sum of the Certificate Principal Balance
of the Class A-2 Certificates and (2) the product of (x) the Group B Principal
Distribution Percentage and (y) the Class A Principal Distribution Amount;
provided, however, that (A) with respect to the Distribution Date on which the
Certificate Principal Balance of the Class A-1 Certificates is initially reduced
to zero (so long as any of the Class A-2 Certificates is outstanding), the Group
A Principal Distribution Percentage of the Class A Principal Distribution Amount
in excess of the amount necessary to reduce the Certificate Principal Balances
of the Class A-1 Certificates to zero will be added to increase the Group B
Principal Distribution Amount and (B) with respect to any Distribution Date
thereafter, the Group B Principal Distribution Amount shall equal the Class A
Principal Distribution Amount.

         Group B Principal Distribution Percentage: With respect to any
Distribution Date, a fraction expressed as a percentage, the numerator of which
is the amount of Principal Funds with respect to such Distribution Date received
with respect to Group B Mortgage Loans, and the denominator of which is the
amount of all Principal Funds with respect to such Distribution Date received on
all the Mortgage Loans.

         Indenture: An indenture relating to the issuance of notes guaranteed by
the NIMs Insurer.

         Initial Adjustment Date: As to any Adjustable Rate Mortgage Loan, the
first Adjustment Date following the origination of such Mortgage Loan.

         Initial Certificate Principal Balance: With respect to any Certificate,
the Certificate Principal Balance of such Certificate or any predecessor
Certificate on the Closing Date as set forth in Section 5.01 hereof.

         Initial Mortgage Rate: As to each Mortgage Loan, the Mortgage Rate in
effect prior to the Initial Adjustment Date.

         Initial Optional Termination Date: The first Distribution Date on which
the aggregate Stated Principal Balance of the Mortgage Loans is equal to or less
than 10% of the aggregate Stated Principal Balance of the Mortgage Loans as of
the Cut-off Date.

         Insurance Policy: With respect to any Mortgage Loan or the related
Mortgaged Property (or the related Underlying Mortgaged Property, in the case of
a Co-op Loan) included in the Trust Fund, any insurance policy, including all
riders and endorsements thereto in effect with respect to such Mortgage Loan or
Mortgaged Property (or related Underlying Mortgage Property, in the case of a
Co-op Loan), including any replacement policy or policies for any insurance
policies.

         Insurance Proceeds: Proceeds paid in respect of a Mortgage Loan or the
related Mortgaged Property (or the related Underlying Mortgaged Property, in the
case of a Co-op Loan) pursuant to any Insurance Policy or any other insurance
policy covering such Mortgage Loan or Mortgaged Property (or Underlying
Mortgaged Property, in the case of a Co-op Loan), to the extent such proceeds
are payable to the mortgagee under the Mortgage, the Servicer or the trustee
under the deed of trust and are not applied to the restoration of the related
Mortgaged Property (or the related Underlying Mortgaged Property, in the case of
a Co-op Loan) or released either to the Mortgagor or to the holder of a senior
lien on the related Mortgaged Property (or the related Underlying Mortgaged
Property in the case of a Co-op Loan) in accordance with the procedures that the
Servicer would follow in servicing mortgage loans held for its own account, in
each case other than any amount included in such Insurance Proceeds in respect
of Insured Expenses.

                                       23
<PAGE>

         Insured Expenses: Expenses covered by an Insurance Policy or any other
insurance policy with respect to a Mortgage Loan or the related Mortgaged
Property (or the related Underlying Mortgaged Property, in the case of a Co-op
Loan).

         Interest Carry Forward Amount: Any of the Class A-1 Interest Carry
Forward Amount, the Class A-2 Interest Carry Forward Amount, the Class S
Interest Carry Forward Amount, the Class R Interest Carry Forward Amount, the
Class M-1 Interest Carry Forward Amount, the Class M-2 Interest Carry Forward
Amount, the Class B-1 Interest Carry Forward Amount, the Class B-2 Interest
Carry Forward Amount, the Class B-3 Interest Carry Forward Amount or the Class C
Interest Carry Forward Amount, as the case may be.

         Interest Determination Date: With respect to the Certificates, (i) for
any Accrual Period, the second LIBOR Business Day preceding the commencement of
such Accrual Period and (ii) for the first Accrual Period, July 20, 2004.

         Interest Funds: With respect to any Distribution Date, the sum, without
duplication, of (1) all scheduled interest due during the related Due Period and
received before the related Servicer Remittance Date or advanced on or before
the related Servicer Remittance Date less the Servicing Fee, (2) all Advances
relating to interest with respect to the Mortgage Loans and such Distribution
Date, (3) all Compensating Interest with respect to the Mortgage Loans and such
Distribution Date, (4) Liquidation Proceeds with respect to the Mortgage Loans
(to the extent that such Liquidation Proceeds relate to interest) collected
during the related Prepayment Period, (5) all proceeds of any purchase pursuant
to Section 2.02 or 2.03 during the related Prepayment Period or pursuant to
Section 9.01 not later than the related Determination Date (to the extent that
such proceeds relate to interest) less the Servicing Fee and (6) all Prepayment
Penalties received with respect to the Mortgage Loans during the related
Prepayment Period, less (A) all Non-Recoverable Advances relating to interest
and (B) other amounts reimbursable to the Servicer and the Trustee pursuant to
this Agreement.

         Latest Possible Maturity Date: The latest maturity date for any
Mortgage Loan in the Trust Fund plus one year.

         LIBOR Business Day: Any day on which banks in the City of London,
England and New York City, U.S.A. are open and conducting transactions in
foreign currency and exchange.

         Liquidated Loan: With respect to any Distribution Date, a defaulted
Mortgage Loan that either (a) has been liquidated through deed-in-lieu of
foreclosure, foreclosure sale, trustee's sale or other realization as provided
by applicable law governing the real property subject to the related Mortgage
and any security agreements and as to which the Servicer has certified (in
accordance with Section 3.12) in the related Prepayment Period that it has
received all amounts it expects to receive in connection with such liquidation
or (b) as to which is not a first lien Mortgage Loan and is delinquent 180 days
or longer, the Servicer has certified in a certificate of an officer of the
Servicer delivered to the Depositor and the Trustee that it does not believe
that there is a reasonable likelihood that any further net proceeds will be
received or recovered with respect to such Mortgage Loan.

         Liquidation Proceeds: Amounts, including Insurance Proceeds, received
in connection with the partial or complete liquidation of a Mortgage Loan,
whether through trustee's sale, foreclosure sale, sale by the Servicer pursuant
to this Agreement or otherwise or amounts received in connection with any
condemnation or partial release of a Mortgaged Property and any other proceeds
received in connection with an REO Property, less the sum of related
unreimbursed Advances, Servicing Fees, Servicing Advances and any other expenses
related to such Mortgage Loan.

                                       24
<PAGE>

         Loan-to-Value Ratio: With respect to any Mortgage Loan, the fraction,
expressed as a percentage, the numerator of which is the original principal
balance of the related Mortgage Loan and the denominator of which is the lesser
of (X) the Appraised Value of the related Mortgaged Property (or applicable
dwelling unit, in the case of a Co-op Loan) and (Y) the sales price of the
related Mortgaged Property (or applicable dwelling unit, in the case of a Co-op
Loan) at the time of origination.

         Losses: Any losses, claims, damages, liabilities or expenses
collectively.

         Lower Tier REMIC: As described in the Preliminary Statement and Section
2.07.

         Lower Tier REMIC Interests: Each of the Class LTA-1 Interest, the Class
LTA-2 Interest, the Class LTM-1 Interest, the Class LTM-2 Interest, the Class
LTB-1 Interest, the Class LTB-2 Interest, the Class LTB-3 Interest, the Class
LTX Interest and the Class LTR Interest.

         Lower Tier REMIC Marker Classes: Each of the classes of Lower Tier
REMIC Regular Interests other than the Class LTX Interest.

         Lower Tier REMIC Regular Interests: Each of the Lower Tier REMIC
Interests other than the Class LTR Interest.

         Maximum Mortgage Rate: With respect to each Adjustable Rate Mortgage
Loan, the maximum rate of interest set forth as such in the related Mortgage
Note and with respect to each Fixed Rate Mortgage Loan, the rate of interest set
forth in the related Mortgage Note.

         Maximum Rate Cap: With respect to any Distribution Date, 12 times the
quotient of (x) the aggregate scheduled interest that would have been due on the
Mortgage Loans during the related Due Period had the Adjustable Rate Mortgage
Loans provided for interest at their maximum lifetime Net Mortgage Rates and the
Fixed Rate Mortgage Loans provided for interest at their Net Mortgage Rates,
divided by (y) the aggregate Stated Principal Balance of the Mortgage Loans as
of the preceding Distribution Date, multiplied by 30 and divided by the actual
number of days in the related Accrual Period.

         MERS: Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or any successor
thereto.

         MERS Loan: Any Mortgage Loan registered with MERS on the MERS System.

         MERS System: The system of recording transfers of mortgage
electronically maintained by MERS.

         Middle Tier REMIC: As described in the Preliminary Statement and
Section 2.07.

         Middle Tier REMIC Interests: Each of the Class MTA-1 Interest, the
Class MTA-2 Interest, the Class MTM-1 Interest, the Class MTM-2 Interest, the
Class MTB-1 Interest, the Class MTB-2 Interest, the Class MTB-3 Interest, the
Class MTC Interest and the Class MTR Interest.

         Middle Tier REMIC Regular Interests: Each of the Middle Tier REMIC
Interests other than the Class MTR Interest.

         MIN: The loan number for any MERS Loan.

         Minimum Mortgage Rate: With respect to each Adjustable Rate Mortgage
Loan, the minimum rate of interest set forth as such in the related Mortgage
Note.

                                       25
<PAGE>

         Minimum Required Overcollateralization Amount: An amount equal to the
product of (x) 0.50% and (y) the Stated Principal Balance of the Mortgage Loans
as of the Cut-off Date.

         MLMCI:  Merrill Lynch Mortgage Capital Inc.

         Monthly Statement: The statement delivered to the Certificateholders
pursuant to Section 4.05.

         Moody's: Moody's Investors Service, Inc. or its successor in interest.

         MOM Loan: Any Mortgage Loan as to which MERS is acting as mortgagee,
solely as nominee for the originator of such Mortgage Loan and its successors
and assigns.

         Mortgage: With respect to a Mortgage Loan that is not a Co-op Loan, the
mortgage, deed of trust or other instrument with all riders attached thereto,
creating a first or second lien or a first or second priority ownership interest
in an estate in fee simple in real property securing a Mortgage Note. With
respect to a Co-op Loan, the security agreement creating a security interest
with all riders attached thereto, in the stock allocated to a dwelling unit in a
residential cooperative housing corporation and pledged to secure such Co-op
Loan and the related Co-op Lease.

         Mortgage File: The mortgage documents listed in Section 2.01 hereof
pertaining to a particular Mortgage Loan and any additional documents delivered
to the Trustee to be added to the Mortgage File pursuant to this Agreement.

         Mortgage Loans: Such of the mortgage loans transferred and assigned to
the Trustee pursuant to the provisions hereof as from time to time are held as a
part of the Trust Fund (including any REO Property), the mortgage loans so held
being identified in the Mortgage Loan Schedule, notwithstanding foreclosure or
other acquisition of title of the related Mortgaged Property. Any mortgage loan
that was intended by the parties hereto to be transferred to the Trust Fund as
indicated by such Mortgage Loan Schedule which is in fact not so transferred for
any reason shall continue to be a Mortgage Loan hereunder until the Purchase
Price with respect thereto has been paid to the Trust Fund.

         Mortgage Loan Schedule: The lists of Mortgage Loans (as from time to
time amended by the Seller to reflect the deletion of Deleted Mortgage Loans and
the addition of Replacement Mortgage Loans pursuant to the provisions of this
Agreement) transferred to the Trustee as part of the Trust Fund and from time to
time subject to this Agreement, attached hereto as Exhibits B-1, B-2 and B-3,
setting forth the following information with respect to each Mortgage Loan:

         (i)      the loan number;

         (ii)     the borrower name and address;

         (iii)    the unpaid principal balance of the Mortgage Loans;

         (iv)     the Initial Mortgage Rate;

         (v)      the original maturity date and the months remaining before
                  maturity date;

         (vi)     the original principal balance;

         (vii)    the Cut-off Date Principal Balance;

         (viii)   the first payment due date of the Mortgage Loan;

                                       26
<PAGE>

         (ix)     the Loan-to-Value Ratio at origination with respect to a first
                  lien Mortgage Loan, or the Combined Loan-to-Value Ratio with
                  respect to a second lien Mortgage Loan;

         (x)      a code indicating whether the residential dwelling at the time
                  of origination was represented to be owner-occupied;

         (xi)     a code indicating the property type;

         (xii)    with respect to each Adjustable Rate Mortgage Loan;

                  (a)      the frequency of each Adjustment Date;

                  (b)      the next Adjustment Date;

                  (c)      the Maximum Mortgage Rate;

                  (d)      the Minimum Mortgage Rate;

                  (e)      the Mortgage Rate as of the Cut-off Date;

                  (f)      the related Periodic Rate Cap;

                  (g)      the Gross Margin;

         (xiii)   location of the related Mortgaged Property (or Underlying
                  Mortgaged Property, in the case of a Co-op Loan);

         (xiv)    a code indicating whether a prepayment penalty is applicable
                  and, if so, the term of such prepayment penalty; and

         (xv)     the Credit Score and date obtained.

         Mortgage Note: The original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan
and all amendments, modifications and attachments thereto, with all riders
attached thereto.

         Mortgage Pool: The aggregate of the Mortgage Loans identified in the
Mortgage Loan Schedule set out on Exhibit B-1.

         Mortgage Rate: The annual rate of interest borne by a Mortgage Note
from time to time.

         Mortgaged Property: The underlying property securing a Mortgage Loan.

         Mortgagor: The obligor on a Mortgage Note.

         Net Mortgage Rate: As to each Mortgage Loan, and at any time, the per
annum rate equal to the then current Mortgage Rate less the Servicing Fee Rate.

         Net Rate: With respect to any Distribution Date, the product of (x) the
weighted average Net Mortgage Rate for the Mortgage Loans calculated based on
the respective Net Mortgage Rates and Stated Principal Balances of the Mortgage
Loans as of the preceding Distribution Date (or, in the case of the first
Distribution Date, as of the Cut-off Date) and (y) a fraction, the numerator of
which is 30 and the denominator of which is the actual number of days in the
related Accrual Period.

                                       27
<PAGE>

         Net WAC: With respect to any Distribution Date, a per annum rate equal
to 12 times the quotient obtained by dividing (x) the total scheduled interest
based on the Net Mortgage Rates in effect on the related Due Date, by (y) the
aggregate Stated Principal Balance of the Mortgage Loans as of the preceding
Distribution Date.

         NIM Notes: The notes to be issued pursuant to the Indenture.

         NIMs Insurer: Any of the one or more insurers, if any, that is
guaranteeing certain payments under any NIM Notes; provided, that upon the
payment in full of the NIM Notes, all rights of the NIMs Insurer hereunder shall
terminate.

         NIMs Insurer Default: A default by each of the NIMs Insurers as such
default is defined in the Indenture.

         Non-Recoverable Advance: Any portion of an Advance previously made or
proposed to be made by the Servicer that, in the good faith judgment of the
Servicer, will not or, in the case of a current delinquency, would not, be
ultimately recoverable by the Servicer from the related Mortgagor, related
Liquidation Proceeds or otherwise with respect to the related Mortgage Loan.

         Non-Recoverable Servicing Advance: Any portion of a Servicing Advance
previously made or proposed to be made by the Servicer that, in the good faith
judgment of the Servicer, will not or, in the case of a current Servicing
Advance, would not, be ultimately recoverable by the Servicer from the related
Mortgagor, related Liquidation Proceeds or otherwise with respect to the related
Mortgage Loan.

         Non-Supported Interest Shortfall: As defined in Section 4.02.

         Offered Certificates: The Class A-1, Class A-2, Class S, Class M-1,
Class M-2 and Class R Certificates.

         Officer's Certificate: A certificate (1) signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, a vice president (however
denominated), an Assistant Vice President, the Treasurer, the Secretary, or one
of the assistant treasurers or assistant secretaries of the Depositor, the
Servicer (or any other officer customarily performing functions similar to those
performed by any of the above designated officers and also to whom, with respect
to a particular matter, such matter is referred because of such officer's
knowledge of and familiarity with a particular subject) or (2), if provided for
in this Agreement, signed by a Servicing Officer, as the case may be, and
delivered to the Depositor, the Servicer or the Trustee, as the case may be, as
required by this Agreement.

         One-Month LIBOR: With respect to any Accrual Period, the rate
determined by the Trustee on the related Interest Determination Date on the
basis of (a) the offered rates for one-month United States dollar deposits, as
such rates appear on Telerate page 3750, as of 11:00 a.m. (London time) on such
Interest Determination Date or (b) if such rate does not appear on Telerate Page
3750 as of 11:00 a.m. (London time), the offered rates of the Reference Banks
for one-month United States dollar deposits, as such rates appear on the Reuters
Screen LIBO Page, as of 11:00 a.m. (London time) on such Interest Determination
Date. If One-Month LIBOR is determined pursuant to clause (b) above, on each
Interest Determination Date, One-Month LIBOR for the related Accrual Period will
be established by the Trustee as follows:

                           (i)      If on such Interest Determination Date two
                                    or more Reference Banks provide such offered
                                    quotations, One-Month LIBOR for the related

                                       28
<PAGE>

                                    Accrual Period shall be the arithmetic mean
                                    of such offered quotations (rounded upwards
                                    if necessary to the nearest whole multiple
                                    of 0.03125%).

                           (ii)     If on such Interest Determination Date fewer
                                    than two Reference Banks provide such
                                    offered quotations, One-Month LIBOR for the
                                    related Accrual Period shall be the higher
                                    of (i) One-Month LIBOR as determined on the
                                    previous Interest Determination Date and
                                    (ii) the Reserve Interest Rate.

         Opinion of Counsel: A written opinion of counsel, who may be counsel
for the Depositor or the Servicer, reasonably acceptable to each addressee of
such opinion; provided, however, that with respect to Section 6.04 or 10.01, or
the interpretation or application of the REMIC Provisions, such counsel must (1)
in fact be independent of the Depositor and the Servicer, (2) not have any
direct financial interest in the Depositor or the Servicer or in any affiliate
of either, and (3) not be connected with the Depositor or the Servicer as an
officer, employee, promoter, underwriter, trustee, partner, director or person
performing similar functions.

         Optional Termination: The termination of the Trust Fund hereunder
pursuant to Section 9.01(a) hereof.

         Optional Termination Amount: The amount received by the Trustee in
connection with any purchase of all of the Mortgage Loans and REO Properties
pursuant to Section 9.01(b) hereof.

         Optional Termination Price: On any date after the Initial Optional
Termination Date, an amount equal to the sum of (A) the aggregate Stated
Principal Balance of each Mortgage Loan (other than any Mortgage Loan that has
become an REO Property) as of the Distribution Date on which the proceeds of the
Optional Termination are distributed to the Certificateholders, plus accrued
interest thereon at the applicable Mortgage Rate as of the Due Date preceding
the Distribution Date on which the proceeds of the Optional Termination are
distributed to Certificateholders and the fair market value of any REO Property,
plus accrued interest thereon as of the Distribution Date on which the proceeds
of the Optional Termination are distributed to Certificateholders, (B) any
unreimbursed out-of-pocket costs and expenses owed to the Trustee (including any
amounts incurred by the Trustee in connection with conducting the Auction) or
the Servicer and any unpaid or unreimbursed Servicing Fees, Advances and
Servicing Advances, (C) any unreimbursed costs, penalties and/or damages
incurred by the Trust Fund in connection with any violation relating to any of
the Mortgage Loans of any predatory or abusive lending law and (D) in the event
an Auction has been conducted, all reasonable fees and expenses incurred by the
Trustee to conduct the Auction.

         OTS:  The Office of Thrift Supervision.

         Outstanding: With respect to the Certificates as of any date of
determination, all Certificates theretofore executed and authenticated under
this Agreement except: (1) Certificates theretofore canceled by the Trustee or
delivered to the Trustee for cancellation; and (2) Certificates in exchange for
which or in lieu of which other Certificates have been executed by the Trustee
and delivered by the Trustee pursuant to this Agreement.

         Outstanding Mortgage Loan: As of any Distribution Date, a Mortgage Loan
with a Stated Principal Balance greater than zero that was not the subject of a
Principal Prepayment in full, and that did not become a Liquidated Loan, prior
to the end of the related Due Period.

                                       29
<PAGE>

         Overcollateralization Amount: As of any date of determination, the
excess of (1) the Stated Principal Balance of the Mortgage Loans over (2) the
Certificate Principal Balance of the Certificates (other than the Class P
Certificates and the Class C Certificates).

         Ownership Interest: As to any Certificate, any ownership interest in
such Certificate including any interest in such Certificate as the Holder
thereof and any other interest therein, whether direct or indirect, legal or
beneficial.

         Ownit:  Ownit Mortgage Solutions, Inc.

         Ownit Bring Down Letter: That certain letter agreement, dated as of
July 22, 2004, between MLMCI and Ownit.

         Ownit Transfer Agreement: The Master Mortgage Loan Purchase and Interim
Servicing Agreement, dated as of March 1, 2004, as amended, between MLMCI, as
initial purchaser and Ownit, as seller and interim servicer, as supplemented by
the Ownit Bring Down Letter.

         Pass-Through Rate: With respect to any Class of Certificates, the
corresponding Pass-Through Rate for such Class of Certificates.

         Percentage Interest:  With respect to:

                           (iii)    any Class, the percentage interest in the
                                    undivided beneficial ownership interest
                                    evidenced by such Class which shall be equal
                                    to the Class Certificate Principal Balance
                                    of such Class divided by the Class Principal
                                    Balance of all Classes; and

                           (iv)     any Certificate, the Percentage Interest
                                    evidenced thereby of the related Class shall
                                    equal the percentage obtained by dividing
                                    the Denomination of such Certificate by the
                                    aggregate of the Denominations of all
                                    Certificates of such Class; except that in
                                    the case of any Class P Certificates, the
                                    Percentage Interest with respect to such
                                    Certificate shown on the face of such
                                    Certificate.

         Periodic Rate Cap: As to each Adjustable Rate Mortgage Loan and the
related Mortgage Note, the provision therein that limits permissible increases
and decreases in the Mortgage Rate on any Adjustment Date.

         Permitted Activities: The primary activities of the trust created
pursuant to this Agreement which shall be:

                           (i)      holding Mortgage Loans transferred from the
                                    Depositor and other assets of the Trust
                                    Fund, including the Cap Contract and any
                                    credit enhancement and passive derivative
                                    financial instruments that pertain to
                                    beneficial interests issued or sold to
                                    parties other than the Depositor, its
                                    Affiliates, or its agents;

                           (ii)     issuing Certificates and other interests in
                                    the assets of the Trust Fund;

                           (iii)    receiving collections on the Mortgage Loans
                                    and the Cap Contract and making payments on
                                    such Certificates and interests in
                                    accordance with the terms of this Agreement;
                                    and

                                       30
<PAGE>

                           (iv)     engaging in other activities that are
                                    necessary or incidental to accomplish these
                                    limited purposes, which activities cannot be
                                    contrary to the status of the Trust Fund as
                                    a qualified special purpose entity under
                                    existing accounting literature.

         Permitted Investments: At any time, any one or more of the following
obligations and securities:

                           (i)      obligations of the United States or any
                                    agency thereof, provided such obligations
                                    are backed by the full faith and credit of
                                    the United States;

                           (ii)     general obligations of or obligations
                                    guaranteed by any state of the United States
                                    or the District of Columbia receiving the
                                    highest long-term debt rating of each Rating
                                    Agency rating the Certificates;

                           (iii)    commercial or finance company paper, other
                                    than commercial or finance company paper
                                    issued by the Depositor, the Trustee or any
                                    of its Affiliates, which is then receiving
                                    the highest commercial or finance company
                                    paper rating of each such Rating Agency;

                           (iv)     certificates of deposit, demand or time
                                    deposits, or bankers' acceptances (other
                                    than bankers' acceptances issued by the
                                    Trustee or any of its Affiliates) issued by
                                    any depository institution or trust company
                                    incorporated under the laws of the United
                                    States or of any state thereof and subject
                                    to supervision and examination by federal
                                    and/or state banking authorities, provided
                                    that the commercial paper and/or long term
                                    unsecured debt obligations of such
                                    depository institution or trust company are
                                    then rated one of the two highest long-term
                                    and the highest short-term ratings of each
                                    such Rating Agency for such securities;

                           (v)      demand or time deposits or certificates of
                                    deposit issued by any bank or trust company
                                    or savings institution to the extent that
                                    such deposits are fully insured by the FDIC;

                           (vi)     guaranteed reinvestment agreements issued by
                                    any bank, insurance company or other
                                    corporation rated in the two highest
                                    long-term or the highest short-term ratings
                                    of each Rating Agency containing, at the
                                    time of the issuance of such agreements,
                                    such terms and conditions as will not result
                                    in the downgrading or withdrawal of the
                                    rating then assigned to the Certificates by
                                    any such Rating Agency as evidenced by a
                                    letter from each Rating Agency;

                           (vii)    repurchase obligations with respect to any
                                    security described in clauses (i) and (ii)
                                    above, in either case entered into with a
                                    depository institution or trust company
                                    (acting as principal) described in clause
                                    (v) above;

                           (viii)   securities (other than stripped bonds,
                                    stripped coupons or instruments sold at a
                                    purchase price in excess of 115% of the face
                                    amount thereof) bearing interest or sold at
                                    a discount issued by any corporation, other
                                    than the Trustee or any of its Affiliates,
                                    incorporated under the laws of the United
                                    States or any state thereof which, at the
                                    time of such

                                       31
<PAGE>

                                    investment, have one of the two highest long
                                    term ratings of each Rating Agency;

                           (ix)     interests in any money market fund
                                    (including those managed or advised by the
                                    Trustee or its affiliates) which at the date
                                    of acquisition of the interests in such fund
                                    and throughout the time such interests are
                                    held in such fund has the highest applicable
                                    long term rating by each Rating Agency
                                    rating such fund; and

                           (x)      short term investment funds sponsored by any
                                    trust company or national banking
                                    association incorporated under the laws of
                                    the United States or any state thereof,
                                    other than the Trustee or any of its
                                    Affiliates, which on the date of acquisition
                                    has been rated by each such Rating Agency in
                                    their respective highest applicable rating
                                    category;

provided, that no such instrument shall be a Permitted Investment if such
instrument (i) evidences the right to receive interest only payments with
respect to the obligations underlying such instrument, (ii) is purchased at a
premium or above par or (iii) is purchased at a deep discount; provided,
further, that no such instrument shall be a Permitted Investment (A) if such
instrument evidences principal and interest payments derived from obligations
underlying such instrument and the interest payments with respect to such
instrument provide a yield to maturity of greater than 120% of the yield to
maturity at par of such underlying obligations, or (B) if it may be redeemed at
a price below the purchase price (the foregoing clause (B) not to apply to
investments in units of money market funds pursuant to clause (ix) above); and
provided, further, (I) that no amount beneficially owned by any REMIC
(including, without limitation, any amounts collected by the Servicer but not
yet deposited in the Collection Account) may be invested in investments (other
than money market funds) treated as equity interests for Federal income tax
purposes, unless the Servicer and/or the Trustee shall receive an Opinion of
Counsel acceptable to the Servicer and/or Trustee, at the expense of the party
requesting that such investment be made, to the effect that such investment will
not adversely affect the status of the any REMIC provided for herein as a REMIC
under the Code or result in imposition of a tax on the Trust Fund or any REMIC
provided for herein and (II) any such investment must be a "permitted
investment" within the meaning of Section 860G(a)(5) of the Code. Permitted
Investments that are subject to prepayment or call may not be purchased at a
price in excess of par.

         Permitted Transferee: Any Person other than (i) the United States, any
State or political subdivision thereof, or any agency or instrumentality of any
of the foregoing, (ii) a foreign government, International Organization or any
agency or instrumentality of either of the foregoing, (iii) an organization
(except certain farmers' cooperatives described in Section 521 of the Code) that
is exempt from tax imposed by Chapter 1 of the Code (including the tax imposed
by Section 511 of the Code on unrelated business taxable income) on any excess
inclusions (as defined in Section 860E(c)(1) of the Code) with respect to the
Class R or Class R-X Certificate, (iv) rural electric and telephone cooperatives
described in Section 1381(a)(2)(C) of the Code, and (v) a Person that is not a
citizen or resident of the United States, a corporation or partnership (or other
entity treated as a corporation or partnership for United States federal income
tax purposes) created or organized in or under the laws of the United States or
any State thereof or the District of Columbia or an estate whose income from
sources without the United States is includable in gross income for United
States federal income tax purposes regardless of its connection with the conduct
of a trade or business within the United States, or a trust if a court within
the United States is able to exercise primary supervision over the
administration of the trust and one or more United States persons have authority
to control all substantial decisions of the trust, unless, in the case of this
clause (v), such Person has furnished the transferor, the Trustee with a duly
completed Internal Revenue Service Form W-8ECI or applicable successor form. The
terms "United States," "State" and

                                       32
<PAGE>

"International Organization" shall have the meanings set forth in Section 7701
of the Code. A corporation will not be treated as an instrumentality of the
United States or of any State thereof for these purposes if all of its
activities are subject to tax and, with the exception of the Federal Home Loan
Mortgage Corporation, a majority of its board of directors is not selected by
such government unit.

         Person: Any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government, or any agency or political subdivision thereof.

         Pool Stated Principal Balance: As to any Distribution Date, the
aggregate of the Stated Principal Balances, as of such Distribution Date, of the
Mortgage Loans that were Outstanding Mortgage Loans as of such date.

         Preference Claim:  The meaning set forth in Section 4.04(l) hereof.

         Prepayment Assumption: A rate or rates of prepayment, as described in
the Prospectus Supplement in the definition of "Modeling Assumptions," relating
to the Certificates.

         Prepayment Interest Shortfall: With respect to any Distribution Date,
for each Mortgage Loan that was the subject of a partial Principal Prepayment or
a Principal Prepayment in full (other than a Principal Prepayment in full
resulting from the purchase of a Mortgage Loan pursuant to Section 2.02, 2.03 or
9.01 hereof), the amount, if any, by which (i) one month's interest at the
applicable Net Mortgage Rate on the Stated Principal Balance of such Mortgage
Loan as of the preceding Distribution Date or in the case of a partial Principal
Prepayment on the amount of such prepayment exceeds (ii) the amount of interest
paid or collected in connection with such Principal Prepayment.

         Prepayment Period: With respect to any Distribution Date, the period
beginning with the opening of business on the first day of the calendar month
preceding the month in which such Distribution Date occurs and ending on the
close of business on the last day of such month.

         Principal Distribution Amount: With respect to each Distribution Date,
the sum of (i) the Principal Funds for such Distribution Date and (ii) any Extra
Principal Distribution Amount for such Distribution Date.

         Principal Funds: With respect to the Mortgage Loans and any
Distribution Date, the sum, without duplication, of (1) all scheduled principal
due during the related Due Period and received before the related Servicer
Remittance Date or advanced on or before the related Servicer Remittance Date,
(2) all Principal Prepayments collected in the related Prepayment Period, (3)
the Stated Principal Balance of each Mortgage Loan that was purchased by the
Depositor or the Servicer during the related Prepayment Period or, in the case
of a purchase pursuant to Section 9.01, (4) the amount, if any, by which the
aggregate unpaid principal balance of any Replacement Mortgage Loan is less than
the aggregate unpaid principal of the related Deleted Mortgage Loans delivered
by the Seller in connection with a substitution of a Mortgage Loan pursuant to
Section 2.03(c), (5) all Liquidation Proceeds collected during the related
Prepayment Period (to the extent such Liquidation Proceeds relate to principal),
(6) all Subsequent Recoveries received during the related Due Period and (7) all
other collections and recoveries in respect of principal during the related
Prepayment Period less (A) all Non-Recoverable Advances relating to principal
with respect to the Mortgage Loans and (B) all other amounts reimbursable to the
Servicer and the Trustee pursuant to this Agreement and allocable to principal.

         Principal Prepayment: Any Mortgagor payment or other recovery of (or
proceeds with respect to) principal on a Mortgage Loan (including Mortgage Loans
purchased or repurchased under Sections 2.02, 2.03, 3.12 and 9.01 hereof) that
is received in advance of its scheduled Due Date and is not accompanied

                                       33
<PAGE>

by an amount as to interest representing scheduled interest due on any date or
dates in any month or months subsequent to the month of prepayment. Partial
Principal Prepayments shall be applied by the Servicer in accordance with the
terms of the related Mortgage Note.

         Prospectus Supplement: The Prospectus Supplement dated July 20, 2004
relating to the public offering of the Offered Certificates.

         PUD:  A Planned Unit Development.

         Purchase Price: With respect to any Mortgage Loan required to be
repurchased by the Seller or a Transferor, pursuant to Section 2.02 or 2.03
hereof, or purchased by the Servicer pursuant to Section 3.12(c) hereof, an
amount equal to the sum of (i) 100% of the unpaid principal balance of the
Mortgage Loan as of the date of such purchase together with any unreimbursed
Servicing Advances, (ii) accrued interest thereon at the applicable Mortgage
Rate from (a) the date through which interest was last paid by the Mortgagor to
(b) the Due Date in the month in which the Purchase Price is to be distributed
to Certificateholders and (iii) any costs and damages incurred by the Trust Fund
(or the Trustee on behalf of the Trust Fund) in connection with any violation
relating to such Mortgage Loan of any anti-predatory or anti-abusive lending
laws. With respect to any REO Property purchase by the Servicer pursuant to
Section 3.12(c) hereof, an amount equal to the fair market value of such REO
Property, as determined in good faith by the Servicer.

         Rating Agency: Either of Fitch or S&P. If any such organization or its
successor is no longer in existence, "Rating Agency" shall be a nationally
recognized statistical rating organization, or other comparable Person,
designated by the Depositor, notice of which designation shall be given to the
Trustee. References herein to a given rating category of a Rating Agency shall
mean such rating category without giving effect to any modifiers.

         Realized Loss: With respect to (1) a Liquidated Loan, the amount, if
any, by which the Stated Principal Balance and accrued interest thereon at the
Net Mortgage Rate exceeds the amount actually recovered by the Servicer with
respect thereto (net of reimbursement of Advances and Servicing Advances) at the
time such Mortgage Loan became a Liquidated Loan or (2) a Mortgage Loan which is
not a Liquidated Loan, any amount of principal that the Mortgagor is no longer
legally required to pay (except for the extinguishment of debt that results from
the exercise of remedies due to default by the Mortgagor).

         Record Date: With respect to any Distribution Date, the close of
business on the last Business Day of the month preceding the month in which the
applicable Distribution Date occurs (or, in the case of the first Distribution
Date, the Closing Date).

         Reference Banks: Barclays Bank PLC, JPMorgan Chase Bank, Citibank,
N.A., Wells Fargo Bank, N.A. and NatWest, N.A.; provided that if any of the
foregoing banks are not suitable to serve as a Reference Bank, then any leading
banks selected by the Trustee with the consent of the NIMs Insurer which are
engaged in transactions in Eurodollar deposits in the international Eurocurrency
market (i) with an established place of business in London, England and (ii)
whose quotations appear on the Reuters Screen LIBO Page on the relevant Interest
Determination Date.

         Regular Certificate: Any one of the Class A-1, Class A-2, Class M-1,
Class M-2, Class B-1, Class B-2 and Class B-3 Certificates.

         Related Certificates: With respect to the Class MTA-1 Interest, the
Class A-1 and Class R Certificates. With respect to the Class MTA-2 Interest,
the Class A-2 Certificates. With respect to the Class MTB-1 Interest, the Class
B-1 Certificates. With respect to the Class MTB-2 Interest, the Class B-

                                       34
<PAGE>

2 Certificates. With respect to the Class MTB-3 Interest, the Class B-3
Certificates. With respect to the Class MTM-1 Interest, the Class M-1
Certificates. With respect to the Class MTM-2 Interest, the Class M-2
Certificates.

         Relief Act: The Servicemembers Civil Relief Act or any similar state or
local law.

         REMIC: A "real estate mortgage investment conduit" within the meaning
of section 860D of the Code. References herein to "the REMICs" or "a REMIC"
shall mean any of or, as the context requires, all of the Lower Tier REMIC, the
Middle Tier REMIC, the Upper Tier REMIC, the B1 REMIC, the B2 REMIC, the B3
REMIC and the C REMIC.

         REMIC Pass-Through Rate: The Pass-Through Rate for a Class of Related
Certificates calculated by replacing "Available Funds Cap" in such definition
with "Net Rate."

         REMIC Regular Interests: (i) any of the rights under any of the
Certificates (other than the Class P Certificates, the Class R Certificate, the
Class R-X Certificate, the Class S Certificates and the Class C Certificates)
other than the rights in interest rate cap contracts described in Section 2.07,
(ii) each of the UTS REMIC Components and (iii) the Uncertificated Class C
Interest.

         REMIC Provisions: Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at sections 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
proposed, temporary and final regulations and published rulings, notices and
announcements promulgated thereunder, as the foregoing may be in effect from
time to time as well as provisions of applicable state laws.

         REO Property: A Mortgaged Property acquired by the Servicer, on behalf
of the Trustee for the benefit of the Certificateholders, through foreclosure or
deed-in-lieu of foreclosure in connection with a defaulted Mortgage Loan.

         Remittance Report:  The meaning specified in Section 4.04(k) hereof.

         Replacement Mortgage Loan: A Mortgage Loan substituted by the Depositor
for a Deleted Mortgage Loan, which must, on the date of such substitution, as
confirmed in a Request for Release, substantially in the form of Exhibit I (1)
have a Stated Principal Balance, after deduction of the principal portion of the
Scheduled Payment due in the month of substitution, not in excess of, and not
less than 90% of the Stated Principal Balance of the Deleted Mortgage Loan; (2)
with respect to any Fixed Rate Mortgage Loan, have a Mortgage Rate not less than
or no more than 1% per annum higher than the Mortgage Rate of the Deleted
Mortgage Loan and, with respect to any Adjustable Rate Mortgage Loan: (A) have a
Maximum Mortgage Rate no more than 1% per annum higher or lower than the Maximum
Mortgage Rate of the Deleted Mortgage Loan; (B) have a Minimum Mortgage Rate no
more than 1% per annum higher or lower than the Minimum Mortgage Rate of the
Deleted Mortgage Loan; (C) have the same index and Periodic Rate Cap as that of
the Deleted Mortgage Loan and a Gross Margin not more than 1% per annum higher
or lower than that of the Deleted Mortgage Loan; (D) not permit conversion of
the related Mortgage Rate to a fixed Mortgage Rate and (F) currently be accruing
interest at a rate not more than 1% per annum higher or lower than that of the
Deleted Mortgage Loan; (3) have a similar or higher FICO score or credit grade
than that of the Deleted Mortgage Loan; (4) have a Loan-to-Value Ratio (or
Combined Loan-to-Value Ratio, in the case of the Mortgage Loans in a second lien
position) no higher than that of the Deleted Mortgage Loan; (5) have a remaining
term to maturity no greater than (and not more than one year less than) that of
the Deleted Mortgage Loan; (6) provide for a prepayment penalty on terms
substantially similar to those of the prepayment penalty, if any, of the Deleted
Mortgage Loan; (7) have the same lien priority as the Deleted Mortgage Loan; (8)
constitute the same occupancy

                                       35
<PAGE>

type as the Deleted Mortgage Loan; and (9) comply with each representation and
warranty set forth in Section 2.03 hereof.

         Request for Release: The Request for Release of Documents submitted by
the Servicer to the Trustee, substantially in the form of Exhibit I hereto.

         Required Insurance Policy: With respect to any Mortgage Loan, any
insurance policy that is required to be maintained from time to time under this
Agreement.

         Required Loss Percentage: For any Distribution Date, the applicable
percentage for such Distribution Date set forth in the following table:

<TABLE>
<CAPTION>
DISTRIBUTION DATE OCCURRING IN            REQUIRED LOSS PERCENTAGE
-----------------------------             -------------------------------
<S>                                       <C>
August 2007 - July 2008                   3.50% with respect to August
                                          2007, plus an additional 1/12th
                                          of 1.25% for each month thereafter

August 2008 - July 2009                   4.75% with respect to August
                                          2008, plus an additional 1/12th
                                          of 1.00% for each month thereafter

August 2009 - July 2010                   5.75% with respect to August
                                          2009, plus an additional 1/12th
                                          of 0.25% for each month thereafter

August 2010 and thereafter                6.00%
</TABLE>

         Required Percentage: As of any Distribution Date following a Stepdown
Date, the quotient of (1) the excess of (A) the aggregate Stated Principal
Balance of the Mortgage Loans as of such Distribution Date, over (B) the
Certificate Principal Balance of the most senior Class of Certificates
outstanding as of such Distribution Date, prior to giving effect to
distributions to be made on such Distribution Date and (2) the aggregate Stated
Principal Balance of the Mortgage Loans as of such Distribution Date.

         Reserve Interest Rate: With respect to any Interest Determination Date,
the rate per annum that the Trustee determines to be (1) the arithmetic mean
(rounded upwards if necessary to the nearest whole multiple of 0.03125%) of the
one-month United States dollar lending rates which New York City banks selected
by the Trustee are quoting on the relevant Interest Determination Date to the
principal London offices of leading banks in the London interbank market or (2)
in the event that the Trustee can determine no such arithmetic mean, the lowest
one-month United States dollar lending rate which New York City banks selected
by the Trustee are quoting on such Interest Determination Date to leading
European banks.

         Residual Interest: An interest in the Upper Tier REMIC that is entitled
to all distributions of principal and interest on the Class R Certificate other
than distributions in respect of the Class LTR Interest and the Class MTR
Interest and distributions to the extent attributable to an interest rate in
excess of the Net Rate.

         Responsible Officer: When used with respect to the Trustee or Servicer,
any officer of the Trustee or Servicer with direct responsibility for the
administration of this Agreement and also means any other officer to whom, with
respect to a particular matter, such matter is referred because of such
officer's knowledge of and familiarity with the particular subject.

                                       36
<PAGE>

         Reuters Screen LIBO Page: The display designated as page "LIBO" on the
Reuters Monitor Money Rates Service (or such other page as may replace such LIBO
page on that service for the purpose of displaying London interbank offered
rates of major banks.

         S&P: Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc., or its successor in interest.

         Sale Agreement: The Mortgage Loan Sale and Assignment Agreement dated
as of July 1, 2004 between the Depositor and the Seller.

         Scheduled Payment: The scheduled monthly payment on a Mortgage Loan due
on any Due Date allocable to principal and/or interest on such Mortgage Loan.

         Section 302 Requirements: Any rules or regulations promulgated pursuant
to the Sarbanes-Oxley Act of 2002 (as such may be amended from time to time).

         Securities Act:  The Securities Act of 1933, as amended.

         Seller: Merrill Lynch Mortgage Capital Inc., a Delaware corporation, or
its successor in interest.

         Servicer: Litton Loan Servicing LP, a Delaware limited partnership, or
its successor in interest.

         Servicer Remittance Date: With respect to any Distribution Date, the
10th day (or if such day is not a Business Day, the next succeeding Business
Day) of the month in which the related Distribution Date occurs.

         Servicing Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses incurred in the performance by the Servicer of its
servicing obligations hereunder, including, but not limited to, the cost of (1)
the preservation, inspection, restoration and protection of a Mortgaged Property
(or Underlying Mortgaged Property, in the case of a Co-op Loan), including
without limitation advances in respect of real estate taxes and assessments, (2)
any collection, enforcement or judicial proceedings, including without
limitation foreclosures, collections and liquidations, (3) the conservation,
management, sale and liquidation of any REO Property and (4) compliance with the
obligations under Section 3.10; provided that such amounts are required to be
advanced, only to the extent such advances constitute "unanticipated expenses"
within the meaning of Treasury Regulation Section 1.860G-1(b)(ii).

         Servicing Fee: As to each Mortgage Loan and any Distribution Date, an
amount equal to the product of one-twelfth of the Servicing Fee Rate and the
Stated Principal Balance of such Mortgage Loan or, in the event of any payment
of interest that accompanies a Principal Prepayment in full made by the
Mortgagor, interest at the Servicing Fee Rate on the Stated Principal Balance of
such Mortgage Loan as of the preceding Distribution Date for the period covered
by such payment of interest.

         Servicing Fee Rate:  0.500% per annum.

         Servicing Officer: Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and facsimile signature appear on a list of servicing officers furnished to
the Trustee by the Servicer on the Closing Date pursuant to this Agreement, as
such lists may from time to time be amended.

         Servicing Rights Pledgee: One or more lenders, selected by the
Servicer, to which the Servicer may pledge and assign all of its right, title
and interest in, to and under this Agreement, including Wachovia Bank, N.A., as
the representative of certain lenders.

                                       37
<PAGE>

         Servicing Transfer Costs: All costs associated with the transfer of
servicing from the predecessor Servicer, including, without limitation, any
costs or expenses associated with the termination of the predecessor Servicer,
the appointment of a successor servicer, the complete transfer of all servicing
data and the completion, correction or manipulation of such servicing data as
may be required by the Trustee or any successor servicer to correct any errors
or insufficiencies in the servicing data or otherwise to enable the Trustee or
successor servicer to service the Mortgage Loans properly and effectively.

         SFAS 140: Statement of Financial Accounting Standard No. 140,
Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities dated September 2000, published by the Financial Accounting
Standards Board of the Financial Accounting Foundation.

         SPV:  As defined in Section 10.14(a).

         Startup Day:  As defined in Section 2.07 hereof.

         Stated Principal Balance: With respect to any Mortgage Loan or related
REO Property (1) as of the Cut-off Date, the Cut-off Date Principal Balance
thereof, and (2) as of any Distribution Date, such Cut-off Date Principal
Balance, minus the sum of (A) the principal portion of the Scheduled Payments
(x) due with respect to such Mortgage Loan during each Due Period ending prior
to such Distribution Date and (y) that were received by the Servicer as of the
close of business on the Determination Date related to such Distribution Date or
with respect to which Advances were made on the Servicer Remittance Date prior
to such Distribution Date and (B) all Principal Prepayments with respect to such
Mortgage Loan received on or prior to the last day of the related Prepayment
Period, and all Liquidation Proceeds to the extent applied by the Servicer as
recoveries of principal in accordance with Section 3.12 with respect to such
Mortgage Loan, that were received by the Servicer as of the close of business on
the last day of the related Due Period. Notwithstanding the foregoing, the
Stated Principal Balance of a Liquidated Loan shall be deemed to be zero.

         Stepdown Date: The later to occur of (1) the Distribution Date in
August 2007 or (2) the first Distribution Date on which (A) the Class A
Certificate Principal Balance (reduced by the Principal Funds with respect to
such Distribution Date) is less than or equal to (B) 68.00% of the Stated
Principal Balances of the Mortgage Loans as of such Distribution Date.

         Subordinated Certificates: Each Class of the Class M and Class B
Certificates.

         Subservicing Agreement: As defined in Section 3.02(a).

         Subsequent Recovery: Any amount received on a Mortgage Loan (net of
amounts reimbursed to the Servicer related to such Mortgage Loan) subsequent to
such Mortgage Loan being determined to be a Liquidated Mortgage Loan.

         Substitution Adjustment Amount: The meaning ascribed to such term
pursuant to Section 2.03(c).

         Tax Matters Person: The Person designated as "tax matters person" in
the manner provided under Treasury regulation Section 1.860F-4(d) and Treasury
regulation Section 301.6231(a)(7)-1.

         Transfer: Any direct or indirect transfer or sale of any Ownership
Interest in a Certificate.

         Transfer Agreement: Each of the CIT Transfer Agreement, the Fieldstone
Transfer Agreement and the Ownit Transfer Agreement.

                                       38
<PAGE>

         Transferor: Each of CIT, Fieldstone and Ownit.

         Trigger Event: With respect to the Certificates after the Stepdown
Date, a Distribution Date on which (1) the quotient of (A) the aggregate Stated
Principal Balance of all Mortgage Loans which are 60 or more days Delinquent
measured on a rolling three month basis (including, for the purposes of this
calculation, Mortgage Loans in foreclosure, REO Properties and Mortgage Loans
with respect to which the applicable Mortgagor is in bankruptcy) and (B) the
Stated Principal Balance of the Mortgage Loans as of the preceding Servicer
Remittance Date, equals or exceeds the product of (i) 50.00% and (ii) Required
Percentage or (2) the quotient (expressed as a percentage) of (A) the aggregate
Realized Losses incurred from the Cut-off Date through the last day of the
calendar month preceding such Distribution Date and (B) the aggregate principal
balance of the Mortgage Loans as of the Cut-off Date exceeds the Required Loss
Percentage.

         Trust Fund: The corpus of the trust (the "Merrill Lynch Mortgage
Investors Trust, Series 2004-HE1") created hereunder consisting of (i) the
Mortgage Loans and all interest and principal received on or with respect
thereto on and after the Cut-off Date to the extent not applied in computing the
Cut-off Date Principal Balance thereof, exclusive of interest not required to be
deposited in the Collection Account; (ii) the Collection Account and the
Certificate Account and all amounts deposited therein pursuant to the applicable
provisions of this Agreement; (iii) property that secured a Mortgage Loan and
has been acquired by foreclosure, deed in lieu of foreclosure or otherwise; (iv)
the mortgagee's rights under the Insurance Policies with respect to the Mortgage
Loans and/or the related Mortgaged Property; (v) all proceeds of the conversion,
voluntary or involuntary, of any of the foregoing into cash or other liquid
property; and (vi) the Cap Contract and Cap Contract Account.

         Trustee: Wells Fargo Bank, N.A., a national banking association, not in
its individual capacity, but solely in its capacity as trustee for the benefit
of the Certificateholders under this Agreement, and any successor thereto, and
any corporation or national banking association resulting from or surviving any
consolidation or merger to which it or its successors may be a party and any
successor trustee as may from time to time be serving as successor trustee
hereunder.

         Uncertificated Class C Interest: An uncertificated interest having (i)
the same rights to payments as the Class C Certificates, other than the rights
to payments of amounts with respect to the Cap Contract, and (ii) the rights to
the payments treated as distributed to the Class C Certificates under Section
2.07(d), provided, however, that such interest shall have no obligation to make
any payments treated as paid by the Class C Certificates pursuant to interest
rate cap agreements under Section 2.07(d).

         Underlying Mortgaged Property: With respect to each Co-op Loan, the
underlying real property owned by the related residential cooperative housing
corporation.

         Unpaid Realized Loss Amount: The Class M-1 Unpaid Realized Loss Amount,
Class M-2 Unpaid Realized Loss Amount, Class B-1 Unpaid Realized Loss Amount,
Class B-2 Unpaid Realized Loss Amount, Class B-3 Unpaid Realized Loss Amount and
Class C Unpaid Realized Loss Amount, collectively.

         Upper Collar: With respect to each Distribution Date on which amounts
are received on the Cap Contracts, a rate equal to the lesser of One-Month LIBOR
and 8.860% per annum.

         Upper Tier REMIC: As described in the Preliminary Statement and Section
2.07.

         Upper Tier REMIC Regular Interest: Any of (i) the Class A-1
Certificates, Class A-2 Certificates, the Class M-1 Certificates, the Class M-2
Certificates, the Class UTC Interest, the Class UTB1 Interest, the Class UTB2
Interest, the Class UTB3 Interest and (ii) any of the UTS REMIC Components.

                                       39
<PAGE>

         USAP Report: A report in compliance with the Uniform Single Attestation
Program for Mortgage Bankers delivered in accordance with Section 3.18.

         UTS-A1 Component: An interest-only "regular interest" in the Upper Tier
REMIC entitled to the interest, if any, that accrues on the Class MTA-1 Interest
at a rate in excess of One-Month LIBOR plus the Class A-1 Margin. The UTS-A1
Component is represented by the Class S Certificates.

         UTS-A2 Component: An interest-only "regular interest" in the Upper Tier
REMIC entitled to the interest, if any, that accrues on the Class MTA-2 Interest
at a rate in excess of One-Month LIBOR plus the Class A-2 Margin. The UTS-A2
Component is represented by the Class S Certificates.

         UTS-B1 Component: An interest-only "regular interest" in the Upper Tier
REMIC entitled to the interest, if any, that accrues on the Class MTB-1 Interest
at a rate in excess of One-Month LIBOR plus the Class B-1 Margin. The UTS-B1
Component is represented by the Class S Certificates.

         UTS-B2 Component: An interest-only "regular interest" in the Upper Tier
REMIC entitled to the interest, if any, that accrues on the Class MTB-2 Interest
at a rate in excess of One-Month LIBOR plus the Class B-2 Margin. The UTS-B2
Component is represented by the Class S Certificates.

         UTS-B3 Component: An interest-only "regular interest" in the Upper Tier
REMIC entitled to the interest, if any, that accrues on the Class MTB-3 Interest
at a rate in excess of One-Month LIBOR plus the Class B-3 Margin. The UTS-B3
Component is represented by the Class S Certificates.

         UTS-M1 Component: An interest-only "regular interest" in the Upper Tier
REMIC entitled to the interest, if any, that accrues on the Class MTM-1 Interest
at a rate in excess of One-Month LIBOR plus the Class M-1 Margin. The UTS-M1
Component is represented by the Class S Certificates.

         UTS-M2 Component: An interest-only "regular interest" in the Upper Tier
REMIC entitled to the interest, if any, that accrues on the Class MTM-2 Interest
at a rate in excess of One-Month LIBOR plus the Class M-2 Margin. The UTS-M2
Component is represented by the Class S Certificates.

         UTS REMIC Components: Each of the UTS-A1 Component, the UTS-A2
Component, the UTS-M1 Component, the UTS-M2 Component, the UTS-B1 Component, the
UTS-B2 Component and the UTS-B3 Component.

         Voting Rights: The portion of the voting rights of all the Certificates
that is allocated to any of the Certificates for purposes of the voting
provisions hereunder. Voting Rights allocated to each Class of Certificates
shall be allocated 95% to the Offered Certificates, 5% to the Class C and Class
P Certificates, with the allocation among the Offered Certificates and the Class
B Certificates to be in proportion to the Class Certificate Principal Balance of
each Class relative to the Class Certificate Principal Balance of all other
Classes. Voting Rights will be allocated among the Certificates of each such
Class in accordance with their respective Percentage Interests.

                                   ARTICLE II

                          CONVEYANCE OF MORTGAGE LOANS;
                         REPRESENTATIONS AND WARRANTIES

         SECTION 2.01. Conveyance of Mortgage Loans

         The Depositor, concurrently with the execution and delivery hereof,
does hereby sell, transfer, assign, set over and convey to the Trustee without
recourse all the right, title and interest of the Depositor in and to the assets
of the Trust Fund. Such assignment includes all interest and principal received
on or with respect to the Mortgage Loans on or after the Cut-off Date (other
than Scheduled Payments due on the Mortgage Loans on or before the Cut-off
Date).

                                       40
<PAGE>

         It is agreed and understood by the Depositor, the Servicer and the
Trustee that it is not intended that any Mortgage Loan be included in the Trust
that is either (i) a "High-Cost Home Loan" as defined in the New Jersey Home
Ownership Act effective November 27, 2003; or (ii) a "High-Cost Home Loan" as
defined in the New Mexico Home Loan Protection Act effective January 1, 2004.

         In connection with such assignment, the Depositor does hereby deliver
to, and deposit with, the Trustee the following documents or instruments with
respect to each Mortgage Loan so assigned that is not a Co-op Loan:

                  (A) The original Mortgage Note endorsed, "Pay to the order of
         ________, without recourse," or "Pay to the order of Wells Fargo Bank,
         N.A., as trustee, without recourse." The Mortgage Note shall include
         all intervening endorsements showing a complete chain of the title from
         the originator to blank;

                  (B) Except as provided below and for each Mortgage Loan that
         is not a MERS Loan, the original recorded Mortgage, with evidence of
         recording thereon, or, if the original Mortgage has not yet been
         returned from the recording office, a copy of the original Mortgage
         certified by the Transferor to be true copy of the original of the
         Mortgage that has been delivered for recording in the appropriate
         recording office of the jurisdiction in which the Mortgaged Property is
         located and in the case of each MERS Loan, the original Mortgage,
         noting the presence of the MIN of the Loan and either language
         indicating that the Mortgage Loan is a MOM Loan or if the Mortgage Loan
         was not a MOM Loan at origination, the original Mortgage and the
         assignment thereof to MERS, with evidence of recording indicated
         thereon, or a copy of the Mortgage certified by the public recording
         office in which such Mortgage has been recorded;

                  (C) In the case of each Mortgage Loan that is not a MERS Loan,
         the original Assignment of each Mortgage, in blank or to "Wells Fargo
         Bank, N.A., as trustee;"

                  (D) The original policy of title insurance (or a preliminary
         title report, commitment or binder if the original title insurance
         policy has not been received from the title insurance company);

                  (E) Originals of any intervening assignments of the Mortgage,
         with evidence of recording thereon or, if the original intervening
         assignment has not yet been returned from the recording office, a copy
         of such assignment certified to be a true copy of the original of the
         assignment which has been sent for recording in the appropriate
         jurisdiction in which the Mortgaged Property is located; and

                  (F) Originals of all assumption and modification agreements,
         if any.

                  In connection with such assignment, the Depositor does hereby
         deliver to, and deposit with, the Trustee the following documents or
         instruments with respect to each Mortgage Loan so assigned that is a
         Co-op Loan:

                  (A) (i) The original Mortgage Note (or a lost note affidavit
         (including a copy of the original Mortgage Note)) or (ii) original
         consolidation, extension and modification agreement (or a lost note
         affidavit (including a copy of the original consolidation, extension
         and modification agreement)), in either case endorsed, "Pay to the
         order of Wells Fargo Bank, N.A., as trustee, without recourse;"

                  (B) The original Mortgage entered into by the Mortgagor with
         respect to such Co-Op Loan;

                                       41
<PAGE>

                  (C) The original Assignment of Mortgage to "Wells Fargo Bank,
         N.A., as trustee;"

                  (D) Original assignments of Mortgage showing a complete chain
         of assignment from the originator of the related Co-Op Loan to the last
         endorsee on the Mortgage Note;

                  (E) Original Form UCC-1 and any continuation statements with
         evidence of filing thereon entered into by the Mortgagor with respect
         to such Co-Op Loan (or a recorded copy thereof);

                  (F) Form UCC-3 (or copy thereof) by the Transferor or its
         agent assigning the security interest covered by such Form UCC-1 to
         "Wells Fargo Bank, N.A., as trustee," together with all Forms UCC-3 (or
         copies thereof) showing a complete chain of assignment from the
         originator of the related Co-op Loan to the Transferor, with evidence
         of recording thereon;

                  (G) Original stock certificate representing the stock
         allocated to the related dwelling unit in the related residential
         cooperative housing corporation and pledged by the related Mortgagor to
         the originator of such Co-op Loan with a stock power in blank attached;

                  (H) Original proprietary lease;

                  (I) Original assignment of proprietary lease or a copy
         thereof, to the Trustee or in blank, and all intervening assignments
         thereof;

                  (J) Original recognition agreement or a copy thereof of the
         interests of the mortgagee with respect to the Co-op Loan by the
         residential cooperative housing corporation, the stock of which was
         pledged by the related Mortgagor to the originator of such Co-op Loan;
         and

                  (K) Originals of any assumption, consolidation or modification
         agreements relating to any of the items specified in (A) through (F)
         above with respect to such Co-op Loan.

         If in connection with any Mortgage Loan which is not a Co-op Loan, the
Depositor cannot deliver the Mortgage, Assignments of Mortgage or assumption,
consolidation or modification, as the case may be, with evidence of recording
thereon, if applicable, concurrently with the execution and delivery of this
Agreement solely because of a delay caused by the public recording office where
such Mortgage, Assignments of Mortgage or assumption, consolidation or
modification, as the case may be, has been delivered for recordation, the
Depositor shall deliver or cause to be delivered to the Trustee written notice
stating that such Mortgage or assumption, consolidation or modification, as the
case may be, has been delivered to the appropriate public recording office for
recordation. Thereafter, the Depositor shall deliver or cause to be delivered to
the Trustee such Mortgage, Assignments of Mortgage or assumption, consolidation
or modification, as the case may be, with evidence of recording indicated
thereon, if applicable, upon receipt thereof from the public recording office.
To the extent any required endorsement is not contained on a Mortgage Note or an
Assignment of Mortgage, the Depositor shall make or cause such endorsement to be
made.

         With respect to any Mortgage Loan that is not a Co-op Loan, none of the
Depositor, the Servicer or the Trustee shall be obligated to cause to be
recorded the Assignment of Mortgage referred to in this Section 2.01. With
respect to any Co-op Loan, none of the Depositor, the Servicer or the Trustee
shall be obligated to cause to be filed the Form UCC-3 referred to in this
Section 2.01. In the event that any Assignment of Mortgage referred to in this
Section 2.01 is not recorded or is improperly recorded, the Servicer and the
Trustee shall have no liability for any failure to receive or act on notices
related to such Assignment of Mortgage.

                                       42
<PAGE>

         The ownership of each Mortgage Note, the Mortgage and the contents of
the related Mortgage File is vested in the Trustee. Neither the Depositor nor
the Servicer shall take any action inconsistent with such ownership and shall
not claim any ownership interest therein. The Depositor and the Servicer shall
respond to any third party inquiries with respect to ownership of the Mortgage
Loans by stating that such ownership is held by the Trustee on behalf of the
Certificateholders. Mortgage documents relating to the Mortgage Loans not
delivered to the Trustee are and shall be held in trust by the Servicer, for the
benefit of the Trustee as the owner thereof, and the Servicer's possession of
the contents of each Mortgage File so retained is for the sole purpose of
servicing the related Mortgage Loan, and such retention and possession by the
Servicer is in a custodial capacity only. The Depositor agrees to take no action
inconsistent with the Trustee's ownership of the Mortgage Loans, to promptly
indicate to all inquiring parties that the Mortgage Loans have been sold and to
claim no ownership interest in the Mortgage Loans.

         It is the intention of this Agreement that the conveyance of the
Depositor's right, title and interest in and to the Trust Fund pursuant to this
Agreement shall constitute a purchase and sale and not a loan. If a conveyance
of Mortgage Loans from the Seller to the Depositor is characterized as a pledge
and not a sale, then the Depositor shall be deemed to have transferred to the
Trustee all of the Depositor's right, title and interest in, to and under the
obligations of the Seller deemed to be secured by said pledge; and it is the
intention of this Agreement that the Depositor shall also be deemed to have
granted to the Trustee a first priority security interest in all of the
Depositor's right, title, and interest in, to and under the obligations of the
Seller to the Depositor deemed to be secured by said pledge and that the Trustee
shall be deemed to be an independent custodian for purposes of perfection of the
security interest granted to the Depositor. If the conveyance of the Mortgage
Loans from the Depositor to the Trustee is characterized as a pledge, it is the
intention of this Agreement that this Agreement shall constitute a security
agreement under applicable law, and that the Depositor shall be deemed to have
granted to the Trustee a first priority security interest in all of the
Depositor's right, title and interest in, to and under the Mortgage Loans, all
payments of principal of or interest on such Mortgage Loans, all other rights
relating to and payments made in respect of the Trust Fund, and all proceeds of
any thereof. If the trust created by this Agreement terminates prior to the
satisfaction of the claims of any Person in any Certificates, the security
interest created hereby shall continue in full force and effect and the Trustee
shall be deemed to be the collateral agent for the benefit of such Person.

         In addition to the conveyance made in the first paragraph of this
Section 2.01, the Depositor does hereby convey, assign and set over to the
Trustee for the benefit of the Certificateholders its rights and interests under
the Sale Agreement, including the Depositor's right, title and interest in the
representations and warranties contained in the Sale Agreement and the benefit
of the repurchase obligations and the obligation of the Seller contained in the
Sale Agreement to take, at the request of the Depositor or the Trustee, all
action on its part which is reasonably necessary to ensure the enforceability of
a Mortgage Loan. The Trustee hereby accepts such assignment, and shall be
entitled to exercise all rights of the Depositor under the Sale Agreement as if,
for such purpose, it were the Depositor. The foregoing sale, transfer,
assignment, set-over, deposit and conveyance does not and is not intended to
result in creation or assumption by the Trustee of any obligation of the
Depositor, the Seller, or any other Person in connection with the Mortgage Loans
or any other agreement or instrument relating thereto except as specifically set
forth herein.

         SECTION 2.02. Acceptance by Trustee of the Mortgage Loans.

         Except as set forth in the Exception Report delivered contemporaneously
herewith (the "Exception Report"), the Trustee acknowledges receipt of the
Mortgage Note for each Mortgage Loan and delivery of a Mortgage File (but does
not acknowledge receipt of all documents required to be included in such
Mortgage File) with respect to each Mortgage Loan and declares that it holds and
will

                                       43
<PAGE>

hold such documents and any other documents constituting a part of the
Mortgage Files delivered to it in trust for the use and benefit of all present
and future Certificateholders. The Depositor will cause the Seller to repurchase
any Mortgage Loan to which a material exception was taken in the Exception
Report unless such exception is cured to the satisfaction of the Trustee within
45 Business Days of the Closing Date.

         The Trustee acknowledges receipt of the Cap Contract (a form of which
is attached hereto as Exhibit N), each Transfer Agreement, each Bring Down
Letter and the Sale Agreement.

         The Trustee agrees, for the benefit of Certificateholders and the NIMs
Insurer, to review each Mortgage File delivered to it within 60 days after the
Closing Date to ascertain and to certify, within 70 days of the Closing Date, to
the NIMs Insurer, the Depositor and the Servicer that all documents required by
Section 2.01 have been executed and received, and that such documents relate to
the Mortgage Loans identified in Exhibit B-1 that have been conveyed to it. If
the Trustee finds any document or documents constituting a part of a Mortgage
File to be missing or defective (that is, mutilated, damaged, defaced or
unexecuted) in any material respect, the Trustee shall promptly (and in any
event within no more than five Business Days) after such finding so notify the
Servicer, the Seller, the Depositor and the NIMs Insurer. In addition, the
Trustee shall also notify the Servicer, the Seller, the Depositor and the NIMs
Insurer, if the original Mortgage with evidence of recording thereon with
respect to a Mortgage Loan is not received within 60 days of the Closing Date;
if it has not been received because of a delay caused by the public recording
office where such Mortgage has been delivered for recordation, the Depositor
shall deliver or cause to be delivered to the Trustee written notice stating
that such Mortgage has been delivered to the appropriate public recording
officer for recordation and thereafter the Depositor shall deliver or cause to
be delivered such Mortgage with evidence of recording thereon upon receipt
thereof from the public recording office. The Trustee shall request that the
Seller correct or cure such omission, defect or other irregularity, or
substitute a Mortgage Loan pursuant to the provisions of Section 2.03(c), within
90 days from the date the Seller was notified of such omission or defect and, if
the Seller does not correct or cure such omission or defect within such period,
that the Seller purchase such Mortgage Loan from the Trust Fund within 90 days
from the date the Trustee notified the Seller of such omission, defect or other
irregularity at the Purchase Price of such Mortgage Loan. The Purchase Price for
any Mortgage Loan purchased pursuant to this Section 2.02 shall be paid to the
Servicer and deposited by the Servicer in the Collection Account promptly upon
receipt, and, upon receipt by the Trustee of written notification of such
deposit signed by a Servicing Officer, the Trustee, upon receipt of a Request
for Release, shall promptly release to the Seller the related Mortgage File and
the Trustee shall execute and deliver such instruments of transfer or
assignment, without recourse, as shall be necessary to vest in the Seller or its
designee, as the case may be, any Mortgage Loan released pursuant hereto, and
the Trustee shall have no further responsibility with regard to such Mortgage
Loan. It is understood and agreed that the obligation of the Seller to purchase,
cure or substitute any Mortgage Loan as to which a material defect in or
omission of a constituent document exists shall constitute the sole remedy
respecting such defect or omission available to the Trustee on behalf of
Certificateholders and the NIMs Insurer. The preceding sentence shall not,
however, limit any remedies available to the Certificateholders, the Depositor,
the Trustee or the NIMs Insurer pursuant to the Sale Agreement, the Transfer
Agreements and the Bring Down Letters. The Trustee shall be under no duty or
obligation to inspect, review and examine such documents, instruments,
certificates or other papers to determine that they are genuine, enforceable or
appropriate to the represented purpose, or that they have actually been
recorded, or that they are other than what they purport to be on their face. The
Trustee shall keep confidential the name of each Mortgagor and the Trustee shall
not solicit any such Mortgagor for the purpose of refinancing the related
Mortgage Loan. It is understood and agreed that all rights and benefits relating
to the solicitation of any Mortgagors and the attendant rights, title and
interest in and to the list of Mortgagors and data relating to their Mortgages
shall be retained by the Servicer.

                                       44
<PAGE>

         Within 70 days of the Closing Date, the Trustee shall deliver to the
Depositor, the Servicer and the NIMs Insurer the Trustee's Certification,
substantially in the form of Exhibit D attached hereto, evidencing the
completeness of the Mortgage Files, with any exceptions noted thereto.

         SECTION 2.03.     Representations, Warranties and Covenants of the
Depositor.

         (a) The Depositor hereby represents and warrants to the Servicer, the
Trustee and the NIMs Insurer as follows, as of the date hereof:

                  (i) The Depositor is duly organized and is validly existing as
         a corporation in good standing under the laws of the State of Delaware
         and has full power and authority (corporate and other) necessary to own
         or hold its properties and to conduct its business as now conducted by
         it and to enter into and perform its obligations under this Agreement
         and the Sale Agreement.

                  (ii) The Depositor has the full corporate power and authority
         to execute, deliver and perform, and to enter into and consummate the
         transactions contemplated by, this Agreement and the Sale Agreement and
         has duly authorized, by all necessary corporate action on its part, the
         execution, delivery and performance of this Agreement and the Sale
         Agreement; and this Agreement and the Sale Agreement, assuming the due
         authorization, execution and delivery hereof by the other parties
         hereto, constitutes a legal, valid and binding obligation of the
         Depositor, enforceable against the Depositor in accordance with its
         terms, subject, as to enforceability, to (i) bankruptcy, insolvency,
         reorganization, moratorium and other similar laws affecting creditors'
         rights generally and (ii) general principles of equity, regardless of
         whether enforcement is sought in a proceeding in equity or at law.

                  (iii) The execution and delivery of this Agreement and the
         Sale Agreement by the Depositor, the consummation of the transactions
         contemplated by this Agreement and the Sale Agreement, and the
         fulfillment of or compliance with the terms hereof are in the ordinary
         course of business of the Depositor and will not (A) result in a
         material breach of any term or provision of the charter or by-laws of
         the Depositor or (B) materially conflict with, result in a violation or
         acceleration of, or result in a material default under, the terms of
         any other material agreement or instrument to which the Depositor is a
         party or by which it may be bound or (C) constitute a material
         violation of any statute, order or regulation applicable to the
         Depositor of any court, regulatory body, administrative agency or
         governmental body having jurisdiction over the Depositor; and the
         Depositor is not in breach or violation of any material indenture or
         other material agreement or instrument, or in violation of any statute,
         order or regulation of any court, regulatory body, administrative
         agency or governmental body having jurisdiction over it which breach or
         violation may materially impair the Depositor's ability to perform or
         meet any of its obligations under this Agreement.

                  (iv) No litigation is pending, or, to the best of the
         Depositor's knowledge, threatened, against the Depositor that would
         materially and adversely affect the execution, delivery or
         enforceability of this Agreement and the Sale Agreement or the ability
         of the Depositor to perform its obligations under this Agreement and
         the Sale Agreement in accordance with the terms hereof.

                  (v) No consent, approval, authorization or order of any court
         or governmental agency or body is required for the execution, delivery
         and performance by the Depositor of, or compliance by the Depositor
         with, this Agreement and the Sale Agreement or the consummation of the
         transactions contemplated hereby, or if any such consent, approval,
         authorization or order is required, the Depositor has obtained the
         same. The Depositor hereby represents and warrants to the Trustee with
         respect to each Mortgage Loan as of the Closing Date, and following the

                                       45
<PAGE>

         transfer of the Mortgage Loans to it by the Seller, the Depositor had
         good title to the Mortgage Loans and the Mortgage Notes were subject to
         no offsets, claims, liens, mortgage, pledge, charge, security interest,
         defenses or counterclaims.

         (b) The representations and warranties of CIT and Fieldstone with
respect to the Mortgage Loans contained in the related Transfer Agreement were
made as of the date of the related Transfer Agreement and brought forward to the
Closing Date pursuant to the related Bring Down Letter. The representations and
warranties of CIT and Fieldstone with respect to the Mortgage Loans contained in
the related Bring Down Letter were made as of the Closing Date. The
representations and warranties of the Seller with respect to the Mortgage Loans
generally and with respect to the Mortgage Loans originated by Ownit contained
in the Sale Agreement were made as of the Closing Date. To the extent that any
fact, condition or event with respect to a Mortgage Loan constitutes a breach of
both (i) a representation or warranty of CIT or Fieldstone under the related
Transfer Agreement and (ii) a representation or warranty of the Seller under the
Sale Agreement, the only right or remedy of the Trustee, the NIMs Insurer or of
any Certificateholder shall be the Trustee's right to enforce the obligations of
the Transferor under any applicable representation or warranty made by it. The
Trustee acknowledges that the Seller shall have no obligation or liability with
respect to any breach of a representation or warranty made by it with respect to
the Mortgage Loans if the fact, condition or event constituting such breach also
constitutes a breach of a representation or warranty made by CIT or Fieldstone
in the related Transfer Agreement, without regard to whether the Transferor
fulfills its contractual obligations in respect of such representation or
warranty. The Trustee also acknowledges that the Seller shall have no obligation
or liability with respect to any breach of a representation or warranty made
solely by CIT or Fieldstone with respect to the Mortgage Loans, without regard
to whether the Transferor fulfills its contractual obligations in respect of
such representation or warranty. The Trustee further acknowledges that the
Depositor shall have no obligation or liability with respect to any breach of
any representation or warranty with respect to the Mortgage Loans (except as set
forth in Section 2.03(a)(v)) under any circumstances.

         In addition to the representations and warranties of CIT and Fieldstone
in the related Transfer Agreement that were brought forward to the Closing Date
pursuant to the related Bring Down Letter, with respect to each Mortgage Loan,
CIT and Fieldstone each made certain additional covenants regarding such
Mortgage Loan, as set forth in the related Transfer Agreement. With respect to
any breach of such additional covenants that materially and adversely affects
the interests of the Certificateholders in such Mortgage Loan, the Seller shall
(1) use reasonable efforts to enforce such covenant against CIT or Fieldstone,
as applicable, and (2) if the Seller successfully enforces any obligation of CIT
or Fieldstone to repurchase such Mortgage Loan, the Seller shall repurchase such
Mortgage Loan in accordance with this Section 2.03. If the Seller does not
successfully enforce the obligation, if any, of CIT or Fieldstone to repurchase
a Mortgage Loan with respect to any breach of any such additional covenants, the
Seller shall have no obligation or right to repurchase or cure such Mortgage
Loan.

         (c) Upon discovery by any of the Depositor, the Servicer, the NIMs
Insurer, or the Trustee of a breach of any representations and warranties that
adversely and materially affects the value of the related Mortgage Loan,
prepayment penalties or the interests of the Certificateholders, the party
discovering such breach shall give prompt written notice to the other parties.
Within 90 days of the discovery of such breach of any representation or
warranty, CIT or Fieldstone or the Seller, as applicable, shall either (a) cure
such breach in all material respects, (b) repurchase such Mortgage Loan or any
property acquired in respect thereof from the Trustee at the Purchase Price or
(c) within the two year period following the Closing Date, substitute a
Replacement Mortgage Loan for the affected Mortgage Loan. In the event of
discovery of a breach of any representation and warranty of CIT or Fieldstone,
the Depositor or the Seller, the Trustee shall enforce its rights under the
related Transfer Agreement or the Sale Agreement for the benefit of
Certificateholders and the NIMs Insurer. If a breach of the representations and
warranties set forth in a Transfer Agreement exists solely due to the
unenforceability

                                       46
<PAGE>

of a prepayment penalty, the Trustee shall notify the NIMs Insurer thereof and
not seek to enforce the repurchase remedy provided for herein unless directed in
writing to do so by the NIMs Insurer. In the event of a breach of the
representations and warranties with respect to the Mortgage Loans set forth in a
Transfer Agreement, the Trustee shall at the request of the NIMs Insurer enforce
the right of the Trust Fund and the NIMs Insurer to be indemnified for such
breach of representation and warranty. In the event that such breach relates
solely to the unenforceability of a prepayment penalty, amounts received in
respect of such indemnity up to the amount of such prepayment penalty shall be
distributed pursuant to Section 4.04(b)(i). As provided in the Sale Agreement,
if CIT or Fieldstone substitutes for a Mortgage Loan for which there is a breach
of any representations and warranties in the related Transfer Agreement which
adversely and materially affects the value of such Mortgage Loan and such
substitute mortgage loan is not a Replacement Mortgage Loan, under the terms of
the Sale Agreement, the Seller will, in exchange for such substitute Mortgage
Loan, (i) provide the applicable Purchase Price for the affected Mortgage Loan
or (ii) within two years of the Closing Date, substitute such affected Mortgage
Loan with a Replacement Mortgage Loan. Any such substitution shall not be
effected prior to the additional delivery to the Trustee of a Request for
Release substantially in the form of Exhibit I and shall not be effected unless
it is within two years of the Startup Day. As provided in the Sale Agreement,
the Seller indemnifies and holds the Trust Fund, the Trustee, the Depositor, the
NIMs Insurer, the Servicer and each Certificateholder harmless against any and
all taxes, claims, losses, penalties, fines, forfeitures, reasonable legal fees
and related costs, judgments, and any other costs, fees and expenses that the
Trust Fund, the Trustee, the Depositor, the NIMs Insurer, the Servicer and any
Certificateholder may sustain in connection with any actions of the Seller
relating to a repurchase of a Mortgage Loan other than in compliance with the
terms of this Section 2.03 and the Sale Agreement, to the extent that any such
action causes (i) any federal or state tax to be imposed on the Trust Fund or
any REMIC provided for herein, including without limitation, any federal tax
imposed on "prohibited transactions" under Section 860F(a)(1) of the Code or on
"contributions after the startup day" under Section 860G(d)(1) of the Code, or
(ii) any REMIC created hereunder to fail to qualify as a REMIC at any time that
any Certificate is outstanding.

         With respect to any Mortgage Loan repurchased by the Depositor pursuant
to this Agreement, by the Seller pursuant to the Sale Agreement or by CIT or
Fieldstone pursuant to the related Transfer Agreement, the principal portion of
the funds received by the Servicer in respect of such repurchase of a Mortgage
Loan will be considered a Principal Prepayment and shall be deposited by the
Servicer in the Certificate Account pursuant to Section 3.05. The Trustee, upon
receipt of the full amount of the Purchase Price for a Deleted Mortgage Loan, or
upon receipt of the Mortgage File for a Replacement Mortgage Loan substituted
for a Deleted Mortgage Loan, shall release or cause to be released and reassign
to the Depositor, the Seller or the related Transferor, as applicable, the
related Mortgage File for the Deleted Mortgage Loan and shall execute and
deliver such instruments of transfer or assignment, in each case without
recourse, representation or warranty, as shall be necessary to vest in such
party or its designee or assignee title to any Deleted Mortgage Loan released
pursuant hereto, free and clear of all security interests, liens and other
encumbrances created by this Agreement, which instruments shall be prepared by
the Trustee, and the Trustee shall not have any further responsibility with
respect to the Mortgage File relating to such Deleted Mortgage Loan.

         With respect to each Replacement Mortgage Loan to be delivered to the
Trustee pursuant to the terms of this Article II in exchange for a Deleted
Mortgage Loan: (i) the Depositor, the applicable Transferor or the Seller, as
applicable, must deliver to the Trustee the Mortgage File for the Replacement
Mortgage Loan containing the documents set forth in Section 2.01 along with a
written certification certifying as to the delivery of such Mortgage File and
containing the granting language set forth in Section 2.01; and (ii) the
Depositor will be deemed to have made, with respect to such Replacement Mortgage
Loan, each of the representations and warranties made by it with respect to the
related Deleted Mortgage Loan. The Trustee shall review the Mortgage File with
respect to each Replacement Mortgage

                                       47
<PAGE>

Loan and certify to the NIMs Insurer and the Depositor that all documents
required by Section 2.01 have been executed and received.

         For any month in which the Seller substitutes one or more Replacement
Mortgage Loans for one or more Deleted Mortgage Loans, the Seller will determine
the amount (if any) by which the aggregate principal balance of all such
Replacement Mortgage Loans as of the date of substitution and the aggregate
prepayment penalties with respect to such Replacement Mortgage Loans is less
than the aggregate Stated Principal Balance (after application of the principal
portion of the Scheduled Payment due in the month of substitution) and aggregate
prepayment penalties of all such Deleted Mortgage Loans. An amount equal to the
aggregate of the deficiencies described in the preceding sentence (such amount,
the "Substitution Adjustment Amount") plus an amount equal to any unreimbursed
costs, penalties and/or damages incurred by the Trust Fund in connection with
any violation relating to such Deleted Mortgage Loan of any predatory or abusive
lending law shall be remitted by the Seller to the Servicer for deposit into the
Collection Account on the Determination Date for the Distribution Date relating
to the Prepayment Period during which the related Mortgage Loan became required
to be purchased or replaced hereunder.

         Notwithstanding any other provision of this Agreement, the right to
substitute Mortgage Loans pursuant to this Article II shall be subject to the
additional limitations that no substitution of a Replacement Mortgage Loan for a
Deleted Mortgage Loan shall be made unless the Trustee and the NIMs Insurer have
received an Opinion of Counsel (at the expense of the party seeking to make the
substitution) that, under current law, such substitution will not (A) affect
adversely the status of any REMIC established hereunder as a REMIC, or of the
related "regular interests" as "regular interests" in any such REMIC, or (B)
cause any such REMIC to engage in a "prohibited transaction" or prohibited
contribution pursuant to the REMIC Provisions.

         The Trustee shall cause the relevant Mortgage Loan Schedules to be
amended in accordance with the terms of this Agreement.

         The Seller shall give or cause to be given written notice to the
Certificateholders and the NIMs Insurer that such substitution has taken place,
shall amend the Mortgage Loan Schedule to reflect the removal of such Deleted
Mortgage Loan from the terms of this Agreement and the substitution of the
Replacement Mortgage Loan or Replacement Mortgage Loans and shall deliver a copy
of such amended Mortgage Loan Schedule to the NIMs Insurer, the Servicer and the
Trustee. Upon such substitution by the Seller, such Replacement Mortgage Loan or
Replacement Mortgage Loans shall constitute part of the Mortgage Pool and shall
be subject in all respects to the terms of this Agreement and the Sale
Agreement, including all applicable representations and warranties thereof
included in the Sale Agreement as of the date of substitution.

         (d) It is understood and agreed that the representations, warranties
and indemnification (i) set forth in this Section 2.03, (ii) of the Seller and
the Depositor set forth in the Sale Agreement and assigned to the Trustee by the
Depositor hereunder and (iii) of each Transferor, assigned by the Seller to the
Depositor pursuant to the Sale Agreement and assigned to the Trustee by the
Depositor hereunder shall each survive delivery of the Mortgage Files and the
Assignment of Mortgage of each Mortgage Loan to the Trustee and shall continue
throughout the term of this Agreement.

         SECTION 2.04. Representations and Warranties of the Servicer.

         The Servicer hereby represents and warrants to the Depositor and the
Trustee as follows, as of the date hereof:

                  (i) The Servicer is a duly formed limited partnership and is
         validly existing and in good standing under the laws of the state of
         its formation and is duly authorized and qualified to

                                       48
<PAGE>

         transact any and all business contemplated by this Agreement to be
         conducted by the Servicer in any state in which a Mortgaged Property
         (or Underlying Mortgaged Property, in the case of a Co-op Loan) is
         located or is otherwise not required under applicable law to effect
         such qualification and, in any event, is in compliance with the doing
         business laws of any such state, to the extent necessary to ensure its
         ability to enforce each Mortgage Loan, to service the Mortgage Loans in
         accordance with the terms of this Agreement and to perform any of its
         other obligations under this Agreement in accordance with the terms
         hereof.

                  (ii) The Servicer has the power and authority to service each
         Mortgage Loan, and to execute, deliver and perform, and to enter into
         and consummate the transactions contemplated by this Agreement and has
         duly authorized by all necessary corporate action on the part of the
         Servicer the execution, delivery and performance of this Agreement; and
         this Agreement, assuming the due authorization, execution and delivery
         hereof by the other parties hereto, constitutes a legal, valid and
         binding obligation of the Servicer, enforceable against the Servicer in
         accordance with its terms, except that (a) the enforceability hereof
         may be limited by bankruptcy, insolvency, moratorium, receivership and
         other similar laws relating to creditors' rights generally and (b) the
         remedy of specific performance and injunctive and other forms of
         equitable relief may be subject to equitable defenses and to the
         discretion of the court before which any proceeding therefor may be
         brought.

                  (iii) The execution and delivery of this Agreement by the
         Servicer, the servicing of the Mortgage Loans under this Agreement, the
         consummation of any other of the transactions contemplated by this
         Agreement, and the fulfillment of or compliance with the terms hereof
         are in the ordinary course of business of the Servicer and will not (A)
         result in a material breach of any term or provision of the charter or
         by-laws of the Servicer or (B) materially conflict with, result in a
         material breach, violation or acceleration of, or result in a material
         default under, the terms of any other material agreement or instrument
         to which the Servicer is a party or by which it may be bound, or (C)
         constitute a material violation of any statute, order or regulation
         applicable to the Servicer of any court, regulatory body,
         administrative agency or governmental body having jurisdiction over the
         Servicer; and the Servicer is not in breach or violation of any
         material indenture or other material agreement or instrument, or in
         violation of any statute, order or regulation of any court, regulatory
         body, administrative agency or governmental body having jurisdiction
         over it which breach or violation may materially impair the Servicer's
         ability to perform or meet any of its obligations under this Agreement.

                  (iv) The Servicer is an approved seller/servicer of mortgage
         loans for Fannie Mae and Servicer of all types of mortgage loans for
         Freddie Mac.

                  (v) No litigation is pending or, to the best of the Servicer's
         knowledge, threatened, against the Servicer that would materially and
         adversely affect the execution, delivery or enforceability of this
         Agreement or the ability of the Servicer to service the Mortgage Loans
         or to perform any of its other obligations under this Agreement in
         accordance with the terms hereof.

                  (vi) No consent, approval, authorization or order of any court
         or governmental agency or body is required for the execution, delivery
         and performance by the Servicer of, or compliance by the Servicer with,
         this Agreement or the consummation of the transactions contemplated
         hereby, or if any such consent, approval, authorization or order is
         required, the Servicer has obtained the same.

                  (vii) The Servicer has fully furnished and will fully furnish
         (for the period it serviced the Mortgage Loans), in accordance with the
         Fair Credit Reporting Act and its implementing regulations, accurate
         and complete information (e.g., favorable and unfavorable) on its
         borrower

                                       49
<PAGE>

         credit files to Equifax, Experian and Trans Union Credit Information
         Company on a monthly basis.

                  (viii) Notwithstanding any state or federal law to the
         contrary, the Servicer shall not impose or collect a Prepayment Penalty
         in any instance when the mortgage debt is accelerated as the result of
         the Mortgagor's default in making the Mortgage Loan payments.

         SECTION 2.05. Substitutions and Repurchases of Mortgage Loans Which Are
Not "Qualified Mortgages".

         Upon discovery by the Depositor, the Servicer or the Trustee that any
Mortgage Loan does not constitute a "qualified mortgage" within the meaning of
section 860G(a)(3) of the Code, the party discovering such fact shall promptly
(and in any event within 5 Business Days of discovery) give written notice
thereof to the other parties. In connection therewith, the Depositor shall, at
the Depositor's option, either (i) substitute, if the conditions in Section
2.03(c) with respect to substitutions are satisfied, a Replacement Mortgage Loan
for the affected Mortgage Loan, or (ii) repurchase the affected Mortgage Loan
within 90 days of such discovery in the same manner as it would a Mortgage Loan
for a breach of representation or warranty contained in Section 2.03. The
Trustee shall reconvey to the Depositor the Mortgage Loan to be released
pursuant hereto in the same manner, and on the same terms and conditions, as it
would a Mortgage Loan repurchased for breach of a representation or warranty
contained in Section 2.03.

         SECTION 2.06. Authentication and Delivery of Certificates.

         The Trustee acknowledges the transfer and assignment to it of the Trust
Fund and, concurrently with such transfer and assignment, the Trustee has caused
to be authenticated and delivered to or upon the order of the Depositor, in
exchange for the Mortgage Loans, Certificates duly authenticated by the Trustee
in authorized denominations evidencing ownership of the entire Trust Fund. The
Trustee agrees to hold the Trust Fund and exercise the rights referred to above
for the benefit of all present and future Holders of the Certificates and to
perform the duties set forth in this Agreement to the best of its ability, to
the end that the interests of the Holders of the Certificates may be adequately
and effectively protected.

         SECTION 2.07. REMIC Elections.

         (a) The Depositor hereby instructs and authorizes the Trustee to make
an appropriate election to treat each of the B1 REMIC, the B2 REMIC, the B3
REMIC, the C REMIC, the Upper Tier REMIC, the Middle Tier REMIC and the Lower
Tier REMIC as a REMIC. The Trustee shall sign the returns providing for such
elections and such other tax or information returns which are required to be
signed by the Trustee under applicable law. This Agreement shall be construed so
as to carry out the intention of the parties that each of the B1 REMIC, the B2
REMIC, the B3 REMIC, the C REMIC, the Upper Tier REMIC, the Middle Tier REMIC
and the Lower Tier REMIC be treated as a REMIC at all times prior to the date on
which the Trust Fund is terminated.

         (b) The Preliminary Statement sets forth the designations and "latest
possible maturity date" for federal income tax purposes of all interests created
hereby. The "Startup Day" for purposes of the REMIC Provisions shall be the
Closing Date. Each REMIC's fiscal year shall be the calendar year.

         The Lower Tier REMIC shall consist of all of the assets of the Trust
Fund (other than (i) any proceeds of prepayment penalties, (ii) amounts paid by
the Servicer, the Seller or the Transferors in respect of prepayment penalties
or waivers thereof pursuant to this Agreement or the Transfer Agreements, as
applicable, (iii) amounts received in respect of any indemnification paid as a
result of a prepayment penalty being unenforceable in breach of the
representations and warranties set forth in the

                                       50
<PAGE>

Transfer Agreements, (iv) the interests issued by the Lower Tier REMIC and the
Middle Tier REMIC, (v) the grantor trusts described in this Section 2.07, (vi)
the Cap Contract and Cap Contract Account and (vii) the Class UTB1 Interest, the
Class UTB2 Interest, the Class UTB3 Interest and the Class UTC Interest). The
Lower Tier REMIC shall issue the Class LTA-1 Interest, Class LTA-2 Interest,
Class LTB-1 Interest, Class LTB-2 Interest, Class LTB-3 Interest, Class LTM-1
Interest, Class LTM-2 Interest and Class LTX Interest which shall be designated
as regular interests of such REMIC and shall issue the Class LTR Interest that
shall be designated as the sole class of residual interest in the Lower Tier
REMIC. Each of the Lower Tier REMIC Regular Interests shall have the
characteristics set forth in its definition.

         The assets of the Middle Tier REMIC shall be the Lower Tier REMIC
Regular Interests. The Middle Tier REMIC Regular Interests shall be designated
as the regular interests in the Middle Tier REMIC and the Class MTR Interest
shall be designated as the sole class of residual interests in the Middle Tier
REMIC. Each of the Middle Tier REMIC Regular Interests shall have the
characteristics set forth in its definition.

         The assets of the Upper Tier REMIC shall be the Middle Tier REMIC
Regular Interests. The Upper Tier REMIC Regular Interests shall be designated as
the regular interests in the Upper Tier REMIC and the Residual Interest shall be
designated as the sole class of residual interest in the Upper Tier REMIC. For
federal income tax purposes, the Pass-Through Rate on each Upper Tier REMIC
Regular Interest (other than the UTS REMIC Components and the Class UTC
Interest) and on the sole class of residual interest in the Upper Tier REMIC
shall be subject to a cap equal to the Net Rate.

         The asset of the B1 REMIC shall be the Class UTB1 Interest. The Class
B-1 Certificate (other than the rights in interest rate cap contracts described
in this Section 2.07) shall be designated as the regular interest in the B1
REMIC and the Class B1R Interest shall be designated as the sole class of
residual interest in the B1 REMIC. For federal income tax purposes, the
pass-through rate on the REMIC regular interest represented by the Class B-1
Certificates shall be subject to a cap equal to the Net Rate.

         The asset of the B2 REMIC shall be the Class UTB2 Interest. The Class
B-2 Certificate (other than the rights in interest rate cap contracts described
in this Section 2.07) shall be designated as the regular interest in the B2
REMIC and the Class B2R Interest shall be designated as the sole class of
residual interest in the B2 REMIC. For federal income tax purposes, the
pass-through rate on the REMIC regular interest represented by the Class B-2
Certificates shall be subject to a cap equal to the Net Rate.

         The asset of the B3 REMIC shall be the Class UTB3 Interest. The Class
B-3 Certificate (other than the rights in interest rate cap contracts described
in this Section 2.07) shall be designated as the regular interest in the B3
REMIC and the Class B3R Interest shall be designated as the sole class of
residual interest in the B3 REMIC. For federal income tax purposes, the
pass-through rate on the REMIC regular interest represented by the Class B-3
Certificates shall be subject to a cap equal to the Net Rate.

         The asset of the C REMIC shall be the Class UTC Interest. The
Uncertificated Class C Interest shall be designated as the regular interest in
the C REMIC and the Class CR Interest shall be designated as the sole class of
residual interest in the C REMIC.

         The beneficial ownership of the Class LTR Interest, the Class MTR
Interest and the Residual Interest shall be represented by the Class R
Certificate. The Class LTR Interest shall not have a principal balance or bear
interest. The Class MTR Interest shall not have a principal balance or bear
interest.

         The beneficial ownership of the Class B1R Interest, the Class B2R
Interest, the Class B3R Interest and the Class CR Interest shall be represented
by the Class R-X Certificate. The Class B1R Interest, the Class B2R Interest,
the Class B3R Interest and the Class CR Interest shall not have principal
balances and shall not bear interest.

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<PAGE>

         (c) The "tax matters person" with respect to each of the Lower Tier
REMIC, the Middle Tier RENIC and the Upper Tier REMIC for purposes of the REMIC
Provisions shall be the beneficial owner of the Class R Certificate; provided,
however, that the Holder of a Class R Certificate, by its acceptance thereof,
irrevocably appoints the Trustee as its agent and attorney-in-fact to act as
"tax matters person" with respect to each such REMIC for purposes of the REMIC
Provisions. If there is more than one beneficial owner of the Class R
Certificate, the "tax matters person" shall be the Person with the greatest
percentage interest in the Class R Certificate and, if there is more than one
such Person, shall be determined under Treasury regulation Section 1.860F-4(d)
and Treasury regulation Section 301.6231(a)(7)-1. The "tax matters person" with
respect to each of the B1 REMIC, the B2 REMIC, the B3 REMIC and the C REMIC for
purposes of the REMIC Provisions shall be the beneficial owner of the Class R-X
Certificate; provided, however, that the Holder of a Class R-X Certificate, by
its acceptance thereof, irrevocably appoints the Trustee as its agent and
attorney-in-fact to act as "tax matters person" with respect to each such REMIC
for purposes of the REMIC Provisions. If there is more than one beneficial owner
of the Class R-X Certificate, the "tax matters person" shall be the Person with
the greatest percentage interest in the Class R-X Certificate and, if there is
more than one such Person, shall be determined under Treasury regulation Section
1.860F-4(d) and Treasury regulation Section 301.6231(a)(7)-1.

         (d) It is intended that the rights of each Class of the Class A, Class
M and Class B Certificates to receive payments in respect of Excess Interest
shall be treated as a right in interest rate cap contracts written by the Class
C Certificateholders in favor of the holders of each Class of the Class A, Class
M and Class B Certificates and such shall be accounted for as property held
separate and apart from the regular interests in the Upper Tier REMIC held by
the holders of the Class A (other than the Class R Certificate) and Class M
Certificates, the residual interest in the Upper Tier REMIC held by the holder
of the Class R Certificate, the regular interest in the B1 REMIC held by the
holders of the Class B-1 Certificates, the regular interest in the B2 REMIC held
by the holders of the Class B-2 Certificates and the regular interest in the B3
REMIC held by the holders of the Class B-3 Certificates. This provision is
intended to satisfy the requirements of Treasury Regulations Section 1.860G-2(i)
for the treatment of property rights coupled with REMIC interests to be
separately respected and shall be interpreted consistently with such regulation.
On each Distribution Date, to the extent that any of the Class A, Class M and
Class B Certificates receive payments of Excess Interest, such amounts, to the
extent not derived from payments received on the Cap Contract, will be treated
as distributed by the C REMIC to the Class C Certificates pro rata in payment of
the amounts specified in Section 4.04(g) and then paid to the relevant Class of
Certificates pursuant to the related interest cap agreement.

         (e) The parties intend that the portion of the Trust Fund consisting of
the Uncertificated Class C Interest, the Cap Contract, the Cap Contract Account
and the obligation of the holders of the Class C Certificates to pay amounts of
Excess Interest to the holders of the Class A, Class M and Class B Certificates
shall be treated as a "grantor trust" under the Code, and the provisions hereof
shall be interpreted consistently with this intention. In furtherance of such
intention, the Trustee shall (i) furnish or cause to be furnished to the holders
of the Class C Certificates information regarding their allocable share, if any,
of the income with respect to such grantor trust, (ii) file or cause to be filed
with the Internal Revenue Service Form 1041 (together with any necessary
attachments) and such other forms as may be applicable and (iii) comply with
such information reporting obligations with respect to payments from such
grantor trust to the holders of Class A, Class M, Class B and Class C
Certificates as may be applicable under the Code.

         (f) The parties intend that the portion of the Trust Fund consisting of
the right to receive proceeds from prepayment penalties collected on the
Mortgage Loans, amounts paid by the Servicer, the Seller or Transferor in
respect of prepayment penalties or waivers thereof pursuant to this Agreement or
the Transfer Agreements, as applicable, and amounts received in respect of any
indemnification paid as a

                                       52
<PAGE>

result of a prepayment penalty being unenforceable in breach of the
representations and warranties set forth in the Transfer Agreements shall be
treated as a "grantor trust" under the Code, and the provisions hereof shall be
interpreted consistently with this intention. In furtherance of such intention,
the Trustee shall (i) furnish or cause to be furnished to the holders of the
Class P Certificates information regarding their allocable share of the income
with respect to such grantor trust and (ii) file or cause to be filed with the
Internal Revenue Service Form 1041 (together with any necessary attachments) and
such other forms as may be applicable.

         (g) All payments of principal and interest at the Net Mortgage Rate on
each of the Mortgage Loans (other than prepayment penalties, amounts paid by the
Servicer, the Seller or the Transferors in respect of prepayment penalties or
waivers thereof pursuant to this Agreement or the Transfer Agreements, as
applicable, and amounts received with respect to any amounts in respect of any
indemnification paid as a result of a prepayment penalty being unenforceable in
breach of the representations and warranties set forth in the Transfer
Agreements) received from the Mortgage Loans shall be paid to the Lower Tier
REMIC Regular Interests until the principal balance of all such interests have
been reduced to zero and any losses allocated to such interests have been
reimbursed. Any excess amounts shall be distributed to the Class LTR Interest.
On each Distribution Date, an amount equal to 50% of the increase in the
Overcollateralization Amount shall be payable as a reduction of the principal
amounts of the Lower Tier REMIC Marker Classes (with such amount allocated among
the Lower Tier REMIC Marker Classes so that each Lower Tier REMIC Marker Class
will have its principal reduced by an amount equal to 50% of any increase in the
Overcollateralization Amount that results in a reduction in the principal
balance of its Corresponding Middle Tier REMIC Interests) and will be accrued
and added to the principal balance of the Class LTX Interest. All payments of
scheduled principal and prepayments of principal on the Mortgage Loans shall be
allocated 50% to the Class LTX Interest and 50% to the Lower Tier REMIC Marker
Classes (with principal payments allocated to each of the Lower Tier REMIC
Marker Classes in an amount equal to 50% of the principal amounts distributed to
the Corresponding Middle Tier Interests in reduction of their principal
amounts). Notwithstanding the preceding sentence, an amount equal to the
principal payments that result in a reduction in the Overcollateralization
Amount shall be treated as payable entirely to the Class LTX Interest. Realized
Losses that are allocated to the Certificates shall be applied to the Lower Tier
REMIC Marker Classes and the Class LTX Interest so that after all distributions
have been made on each Distribution Date (i) the principal balance of each of
the Lower Tier REMIC Marker Classes is equal to 50% of the principal balance of
the Corresponding Middle Tier Interests and (ii) the principal balance of the
Class LTX Interest is equal to the sum of (x) 50% of the aggregate Stated
Principal Balance of the Mortgage Loans and (y) 50% of the Overcollateralization
Amount. Each Lower Tier REMIC Marker Class shall be entitled to receive an
amount equal to 50% of all amounts distributed to the Corresponding Middle Tier
Interest in respect of unreimbursed amounts of Realized Losses. The Class LTX
Interest shall be entitled to receive all other amounts distributed to the
Certificates in respect of unreimbursed amounts of Realized Losses. If on any
Distribution Date the Certificate Principal Balance of any Class of Certificates
is increased pursuant to the last sentence of the definition of "Certificate
Principal Balance", then there shall be an equivalent increase in the principal
amounts of the Lower Tier REMIC Regular Interests, with such increase allocated
(before the making of distributions and the allocation of losses on the Lower
Tier REMIC Regular Interests on such Distribution Date) among the Lower Tier
REMIC Regular Interests so that (i) each of the Lower Tier Marker Classes has a
principal balance equal to 50% of the principal balance of the Corresponding
Middle Tier Interests, (ii) the Class LTX Interest has a principal balance equal
to the sum of (x) 50% of the aggregate Stated Principal Balance of the Mortgage
Loans and (y) 50% of the Overcollateralization Amount.

         All payments of scheduled principal and prepayments on the Mortgage
Loans, and Realized Losses on the Mortgage Loans that are allocated to the
Certificates, shall be allocated among the Middle Tier REMIC Regular Interests
in the same manner as such payments or Realized Losses are allocated to the
Related Certificates (treating the Class S Certificates as Related Certificates
with respect to each of

                                       53
<PAGE>

the Class MTA-1, Class MTA-2, Class MTM-1, Class MTM-2, Class MTB-1, Class MTB-2
and Class MTB-3 Interests in proportion to their respective principal balances
and treating the Class C Certificate as a Related Certificate with respect to
the Class MTC Interest). Each Middle Tier REMIC Regular Interest shall be
entitled to receive all amounts distributed to the Certificates in respect of
unreimbursed amounts of Realized Losses (treating the Class S Certificates as
Related Certificates with respect to each of the Class MTA-1, Class MTA-2, Class
MTM-1, Class MTM-2, Class MTB-1, Class MTB-2 and Class MTB-3 Interests in
proportion to their respective principal balances and treating the Class C
Certificate as a Related Certificate with respect to the Class MTC Interest). If
on any Distribution Date the Certificate Principal Balance of any Class of
Certificates is increased pursuant to the last sentence of the definition of
"Certificate Principal Balance", then there shall be an equivalent increase in
the principal amounts of the Middle Tier REMIC Regular Interests, with such
increase allocated (before the making of distributions and the allocation of
losses on the Middle Tier REMIC Regular Interests on such Distribution Date)
among the Middle Tier REMIC Regular Interests in the same manner as such
increase is allocated to the Related Certificates (treating the Class C
Certificate as a Related Certificate with respect to the Class MTC Interest).

         All payments of scheduled principal and prepayments and Realized Losses
on the Mortgage Loans that are allocated to the Class B-1 Certificates, shall be
allocated to the Class UTB1 Interest. The Class UTB1 Interest shall be entitled
to receive all amounts distributed to the Class B-1 Certificates in respect of
unreimbursed amounts of Realized Losses. If on any Distribution Date the
Certificate Principal Balance of the Class B-1 Certificates is increased
pursuant to the last sentence of the definition of "Certificate Principal
Balance", then there shall be an equivalent increase in the principal amount of
the Class UTB1 Interest.

         All payments of scheduled principal and prepayments and Realized Losses
on the Mortgage Loans that are allocated to the Class B-2 Certificates, shall be
allocated to the Class UTB2 Interest. The Class UTB2 Interest shall be entitled
to receive all amounts distributed to the Class B-2 Certificates in respect of
unreimbursed amounts of Realized Losses. If on any Distribution Date the
Certificate Principal Balance of the Class B-2 Certificates is increased
pursuant to the last sentence of the definition of "Certificate Principal
Balance", then there shall be an equivalent increase in the principal amount of
the Class UTB2 Interest.

         All payments of scheduled principal and prepayments and Realized Losses
on the Mortgage Loans that are allocated to the Class B-3 Certificates, shall be
allocated to the Class UTB3 Interest. The Class UTB3 Interest shall be entitled
to receive all amounts distributed to the Class B-3 Certificates in respect of
unreimbursed amounts of Realized Losses. If on any Distribution Date the
Certificate Principal Balance of the Class B-3 Certificates is increased
pursuant to the last sentence of the definition of "Certificate Principal
Balance", then there shall be an equivalent increase in the principal amount of
the Class UTB3 Interest.

         All payments of scheduled principal and prepayments and Realized Losses
on the Mortgage Loans that are allocated to the Class C Certificates, shall be
allocated to the Class UTC Interest. The Class UTC Interest shall be entitled to
receive all amounts distributed to the Class C Certificates in respect of
unreimbursed amounts of Realized Losses. If on any Distribution Date the
Certificate Principal Balance of the Class C Certificates is increased pursuant
to the last sentence of the definition of "Certificate Principal Balance", then
there shall be an equivalent increase in the principal amount of the Class UTC
Interest.

         In the event that any REMIC provided for herein fails to qualify as a
REMIC, loses its status as a REMIC or incurs federal, state or local taxes as a
result of a prohibited transaction or prohibited contribution under the REMIC
Provisions due to the negligent performance by the Servicer of its duties

                                       54
<PAGE>

and obligations set forth herein, the Servicer shall indemnify the NIMs Insurer,
the Trustee and the Trust Fund against any and all Losses resulting from such
negligence; provided, however, that the Servicer shall not be liable for any
such Losses attributable to the action or inaction of the Trustee, the Depositor
or the Holder of the residual interest in such REMIC, as applicable, nor for any
such Losses resulting from misinformation provided by the Holder of the residual
interest in such REMIC on which the Servicer has relied. The foregoing shall not
be deemed to limit or restrict the rights and remedies of the Holder of the
residual interest in such REMIC now or hereafter existing at law or in equity.
Notwithstanding the foregoing, however, in no event shall the Servicer have any
liability (1) for any action or omission that is taken in accordance with and in
compliance with the express terms of, or which is expressly permitted by the
terms of, this Agreement, (2) for any Losses other than those arising out of a
negligent performance by the Servicer of its duties and obligations set forth
herein, and (3) for any special or consequential damages to Certificateholders
(in addition to payment of principal and interest on the Certificates).

         In the event that any REMIC provided for herein fails to qualify as a
REMIC, loses its status as a REMIC, or incurs federal, state or local taxes as a
result of a prohibited transaction or prohibited contribution under the REMIC
Provisions due to the negligent performance by the Trustee of its duties and
obligations set forth herein, the Trustee shall indemnify the Servicer, the NIMs
Insurer and the Trust Fund against any and all Losses resulting from such
negligence; provided, however, that the Trustee shall not be liable for any such
Losses attributable to the action or inaction of the Servicer, the Depositor or
the Holder of the residual interest in such REMIC, as applicable, nor for any
such Losses resulting from misinformation provided by the Holder of the residual
interest in such REMIC on which the Trustee has relied. The foregoing shall not
be deemed to limit or restrict the rights and remedies of the Holder of the
residual interest in such REMIC now or hereafter existing at law or in equity.
Notwithstanding the foregoing, however, in no event shall the Trustee have any
liability (1) for any action or omission that is taken in accordance with and in
compliance with the express terms of, or which is expressly permitted by the
terms of, this Agreement, (2) for any Losses other than those arising out of a
negligent performance by the Trustee of its duties and obligations set forth
herein, and (3) for any special or consequential damages to Certificateholders
(in addition to payment of principal and interest on the Certificates).

         SECTION 2.08. Covenants of the Servicer.

         The Servicer hereby covenants to each of the other parties to this
Agreement as follows:

         (a) the Servicer shall comply in the performance of its obligations
under this Agreement with all reasonable rules and requirements of the insurer
under each Required Insurance Policy; and

         (b) no written information, certificate of an officer, statement
furnished in writing or written report delivered to the Depositor, the Trustee
or the NIMs Insurer, any affiliate of the Depositor, the Trustee or the NIMs
Insurer and prepared by the Servicer pursuant to this Agreement will be
inaccurate in any material respect, provided, however, that the Servicer shall
not be responsible for inaccurate information provided to it by third parties.

         SECTION 2.09. [RESERVED]

         SECTION 2.10. [RESERVED]

         SECTION 2.11. Permitted Activities of the Trust. The Trust is created
for the object and purpose of engaging in the Permitted Activities. In
furtherance of the foregoing, the Trustee is hereby authorized and directed to
execute and deliver on behalf of the Trust, and to perform the duties and
obligations of the Trustee under, the Cap Contract, an insurance and indemnity
agreement with a NIMs Insurer and any other agreement or instrument related
thereto, in each case in such form as the Depositor

                                       55
<PAGE>

shall direct or shall approve, the execution and delivery of any such agreement
by the Depositor to be conclusive evidence of its approval thereof.

         SECTION 2.12. Qualifying Special Purpose Entity. For purposes of SFAS
140, the parties hereto intend that the Trust Fund shall be treated as a
"qualifying special purpose entity" as such term is used in SFAS 140 and any
successor rule thereto and its power and authority as stated in Section 2.11 of
this Agreement shall be limited in accordance with paragraph 35 thereof.

                                  ARTICLE III.

                          ADMINISTRATION AND SERVICING
                                OF MORTGAGE LOANS

         SECTION 3.01. Servicer to Service Mortgage Loans.

         For and on behalf of the Certificateholders, the Servicer shall service
and administer the Mortgage Loans in accordance with Accepted Servicing
Practices. In connection with such servicing and administration, the Servicer
shall have full power and authority, acting alone and/or through subservicers as
provided in Section 3.02 hereof, to do or cause to be done any and all things
that it may deem necessary or desirable in connection with such servicing and
administration, including but not limited to, the power and authority, subject
to the terms hereof (i) to execute and deliver, on behalf of the
Certificateholders and the Trustee, customary consents or waivers and other
instruments and documents, (ii) to consent to transfers of any Mortgaged
Property (or the stock allocated to a dwelling unit related to a Co-op Loan) and
assumptions of the Mortgage Notes and related Mortgages (but only in the manner
provided in this Agreement), (iii) to collect any Insurance Proceeds and other
Liquidation Proceeds and (iv) subject to Section 3.12(a), to effectuate
foreclosure or other conversion of the ownership of the Mortgaged Property (or
the stock allocated to a dwelling unit related to a Co-op Loan) securing any
Mortgage Loan; provided that, subject to Section 6.03, the Servicer shall not
take any action that is inconsistent with or prejudices the interests of the
Trust Fund or the Certificateholders in any Mortgage Loan serviced by it under
this Agreement or the rights and interests of the other parties to this
Agreement except as otherwise required by this Agreement or by law. The Servicer
shall represent and protect the interest of the Trust Fund in the same manner as
it currently protects its own interest in mortgage loans in its own portfolio in
any claim, proceeding or litigation regarding a Mortgage Loan, but in any case
not in a manner that is a lesser standard than that provided in the first
sentence of this Section 3.01. The Servicer shall not make or permit any
modification, waiver or amendment of any term of any Mortgage Loan which would
cause any of the REMICs provided for herein to fail to qualify as a REMIC or
result in the imposition of any tax under Section 860G(a) or 860G(d) of the
Code. Without limiting the generality of the foregoing, the Servicer, in its own
name or in the name of the Depositor and the Trustee, is hereby authorized and
empowered by the Depositor and the Trustee, when the Servicer believes it
appropriate in its reasonable judgment, to execute and deliver, on behalf of the
Trustee, the Depositor, the Certificateholders or any of them, any and all
instruments of satisfaction or cancellation, or of partial or full release or
discharge and all other comparable instruments, with respect to the Mortgage
Loans, and with respect to the Mortgaged Properties held for the benefit of the
Certificateholders. The Servicer shall prepare and deliver to the Depositor
and/or the Trustee such documents requiring execution and delivery by any or all
of them as are necessary or appropriate to enable the Servicer to service and
administer the Mortgage Loans, including without limitation, any powers of
attorney. Upon receipt of such documents, the Depositor and/or the Trustee shall
execute such documents and deliver them to the Servicer.

         The Trustee shall deliver Powers of Attorney in the form attached
hereto as Exhibit Q to the Servicer promptly after the Closing Date and
additional Powers of Attorney promptly after request therefor by the Servicer.

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         In accordance with the standards of the preceding paragraph, the
Servicer shall advance or cause to be advanced funds as necessary for the
purpose of effecting the payment of taxes and assessments on the Mortgaged
Properties, which advances shall be reimbursable in the first instance from
related collections from the Mortgagors pursuant to Section 3.06, and further as
provided in Section 3.08. To the extent that a Mortgage does not provide for
escrow payments, (i) the Servicer shall determine whether any such payments are
made by the Mortgagor in a manner and at a time that is necessary to avoid the
loss of the Mortgaged Property due to a tax sale or to foreclosure as a result
of a tax lien and (ii) the Servicer shall ensure that all insurance required to
be maintained on the Mortgaged Property pursuant to this Agreement is
maintained. If any such payment has not been made and the Servicer receives
notice of a tax lien being imposed with respect to the Mortgage Loan, the
Servicer will, to the extent required to avoid loss of the Mortgaged Property,
advance or cause to be advanced funds necessary to discharge such lien on the
Mortgaged Property. All costs incurred by the Servicer, if any, in effecting the
timely payments of taxes and assessments on the Mortgaged Properties and related
insurance premiums shall not, for the purpose of calculating monthly
distributions to the Certificateholders, be added to the Stated Principal
Balance under the related Mortgage Loans, notwithstanding that the terms of such
Mortgage Loans so permit.

         In the event that the Mortgage Loan Documents relating to any Mortgage
Loan contain provisions requiring the related Mortgagor to submit to binding
arbitration any disputes arising in connection with such Mortgage Loan, the
Servicer shall be entitled to waive any such provisions on behalf of the Trust
and to send written notice of such waiver to the related Mortgagor, although the
Mortgagor may still require arbitration of such disputes at its option.

         The Servicer shall deliver a list of Servicing Officers to the Trustee
by the Closing Date.

         The Servicer will transmit full-file credit reporting data for each
Mortgage Loan pursuant to Fannie Mae Guide Announcement 97-02 and that for each
Mortgage Loan, the Servicer agrees that it shall report one of the following
statuses each month as follows: current, delinquent (30-, 60-, 90-days, etc.),
foreclosed or charged-off.

         The Servicer shall have at least 30 days' notice of the appointment of
a NIMs Insurer prior to being required to deliver any notices pursuant to this
Agreement to such NIMs Insurer.

         SECTION 3.02. Servicing and Subservicing; Enforcement of the
Obligations of Servicer.

         (a) The Servicer may arrange for the subservicing of any Mortgage Loan
by a subservicer, which may be an affiliate (each, a "subservicer") pursuant to
a subservicing agreement (each, a "subservicing agreement"); provided, however,
that (i) such subservicing arrangement and the terms of the related subservicing
agreement must provide for the servicing of such Mortgage Loans in a manner
consistent with the servicing arrangements contemplated hereunder, (ii) that
such agreement would not result in a withdrawal or downgrading by any Rating
Agency of the ratings of any Certificates or any of the NIM Notes evidenced by a
letter to that effect delivered by each Rating Agency to the Depositor and the
NIMs Insurer and (iii) the NIMs Insurer shall have consented to such
subservicing agreement which consent shall not unreasonably be withheld.
Notwithstanding the provisions of any subservicing agreement, any of the
provisions of this Agreement relating to agreements or arrangements between the
Servicer and a subservicer or reference to actions taken through a subservicer
or otherwise, the Servicer shall remain obligated and liable to the Depositor,
the Trustee and the Certificateholders for the servicing and administration of
the Mortgage Loans in accordance with the provisions of this Agreement without
diminution of such obligation or liability by virtue of such subservicing
agreements or arrangements or by virtue of indemnification from the subservicer
and to the same extent and under the same terms and conditions as if the
Servicer alone were servicing and administering the Mortgage Loans. Every

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subservicing agreement entered into by the Servicer shall contain a provision
giving any successor servicer the option to terminate such agreement with the
consent of the NIMs Insurer in the event a successor servicer is appointed. All
actions of the each subservicer performed pursuant to the related subservicing
agreement shall be performed as an agent of the Servicer with the same force and
effect as if performed directly by the Servicer. The Servicer shall deliver to
the NIMs Insurer and the Trustee copies of all subservicing agreements.

         (b) For purposes of this Agreement, the Servicer shall be deemed to
have received any collections, recoveries or payments with respect to the
Mortgage Loans that are received by a subservicer regardless of whether such
payments are remitted by the subservicer to the Servicer.

         SECTION 3.03. Rights of the Depositor and the Trustee in Respect of the
Servicer.

         Neither the Trustee nor the Depositor shall have any responsibility or
liability for any action or failure to act by the Servicer, and neither of them
is obligated to supervise the performance of the Servicer hereunder or
otherwise.

         SECTION 3.04. Trustee to Act as Servicer.

         In the event that the Servicer shall for any reason no longer be the
servicer hereunder (including by reason of an Event of Default), the Trustee or
its designee shall, within a period of time not to exceed ninety (90) days from
the date of notice of termination or resignation, thereupon assume all of the
rights and obligations of the Servicer hereunder arising thereafter (except that
the Trustee shall not be (i) liable for losses of the Servicer pursuant to
Section 3.10 hereof or for any acts or omissions of such predecessor servicer
hereunder, (ii) obligated to make Advances if it is prohibited from doing so by
applicable law, (iii) obligated to effectuate repurchases or substitutions of
Mortgage Loans hereunder, including pursuant to Section 2.02 or 2.03 hereof,
(iv) responsible for any expenses of the Servicer pursuant to Section 2.03 or
(v) deemed to have made any representations and warranties hereunder, including
pursuant to Section 2.04 or the first paragraph of Section 6.02 hereof);
provided, however that the Trustee or its designee, in its capacity as the
successor servicer, shall immediately assume the Servicer's obligation to make
Advances and Servicing Advances. No such termination or resignation shall affect
any obligation of the Servicer to pay amounts owed under this Agreement and to
perform its duties under this Agreement until its successor assumes all of its
rights and obligations hereunder. If the Servicer shall for any reason no longer
be the servicer (including by reason of any Event of Default), the Trustee (or
any other successor servicer) may, at its option, succeed to any rights and
obligations of the Servicer under any subservicing agreement in accordance with
the terms thereof; provided, however, that the Trustee (or any other successor
servicer) shall not incur any liability or have any obligations in its capacity
as servicer under a subservicing agreement arising prior to the date of such
succession unless it expressly elects to succeed to the rights and obligations
of the Servicer thereunder; and the Servicer shall not thereby be relieved of
any liability or obligations under the subservicing agreement arising prior to
the date of such succession. To the extent any Servicing Transfer Costs or
expenses are not paid by the Servicer pursuant to this Agreement, such amounts
shall be payable out of the Certificate Account; provided that the terminated
servicer shall reimburse the Trust Fund for any such expense incurred by the
Trust Fund upon receipt of a reasonably detailed invoice evidencing such
expenses. If the Trustee is unwilling or unable to act as servicer, or if the
NIMs Insurer so directs the Trustee, the Trustee shall seek to appoint a
successor servicer that is eligible in accordance with the criteria specified
this Agreement and reasonably acceptable to the NIMs Insurer.

         The Servicer shall, upon request of the Trustee, but at the expense of
the Servicer, deliver to the assuming party all documents and records relating
to each subservicing agreement and the Mortgage Loans then being serviced and
otherwise use its best efforts to effect the orderly and efficient transfer of
the subservicing agreement to the assuming party.

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         SECTION 3.05. Collection of Mortgage Loan Payments; Collection Account;
Certificate Account.

         (a) The Servicer shall make reasonable efforts in accordance with
Accepted Servicing Practices to collect all payments called for under the terms
and provisions of the Mortgage Loans to the extent such procedures shall be
consistent with this Agreement and the terms and provisions of any related
Required Insurance Policy. Consistent with the foregoing and subject to Section
3.01 hereof, the Servicer may in its discretion (i) waive any late payment
charge or, if applicable, any penalty interest, or (ii) extend the due dates for
payments due on a Mortgage Note for a period not greater than 180 days;
provided, however, that any extension pursuant to clause (ii) above shall not
affect the amortization schedule of any Mortgage Loan for purposes of any
computation hereunder, except as provided below; provided, further, that the
NIMs Insurer's prior written consent shall be required for any modification,
waiver or amendment after the Cut-off Date if the aggregate number of
outstanding Mortgage Loans which have been modified, waived or amended exceeds
5% of the number of Mortgage Loans as of the Cut-Off Date. In the event of any
such arrangement pursuant to clause (ii) above, subject to Section 4.01, the
Servicer shall make any Advances on the related Mortgage Loan during the
scheduled period in accordance with the amortization schedule of such Mortgage
Loan without modification thereof by reason of such arrangements.
Notwithstanding the foregoing, in the event that any Mortgage Loan is in default
or, in the judgment of the Servicer, such default is reasonably foreseeable, the
Servicer, consistent with the standards set forth in Section 3.01, may also
waive, modify or vary any term of such Mortgage Loan (including modifications
that would change the Mortgage Rate, forgive the payment of principal or
interest or extend the final maturity date of such Mortgage Loan), accept
payment from the related Mortgagor of an amount less than the Stated Principal
Balance in final satisfaction of such Mortgage Loan, or consent to the
postponement of strict compliance with any such term or otherwise grant
indulgence to any Mortgagor (any and all such waivers, modifications, variances,
forgiveness of principal or interest, postponements, or indulgences collectively
referred to herein as "forbearance"), provided, however, that in no event shall
the Servicer grant any such forbearance (other than as permitted by the second
sentence of this Section) with respect to any one Mortgage Loan more than once
in any 12 month period or more than three times over the life of such Mortgage
Loan, and provided, further, that in determining which course of action
permitted by this sentence it shall pursue, the Servicer shall adhere to the
standards of Section 3.01. The Servicer's analysis supporting any forbearance
and the conclusion that any forbearance meets the standards of Section 3.01
shall be reflected in writing in the Mortgage File.

         (b) The Servicer will not waive any prepayment penalty or portion
thereof unless, (i) the enforceability thereof shall have been limited by
bankruptcy, insolvency, moratorium, receivership and other similar laws relating
to creditors' rights generally or is otherwise prohibited by law, or (ii) the
collectability thereof shall have been limited due to acceleration in connection
with a foreclosure or other involuntary payment, or (iii) in the Servicer's
reasonable judgment as described in Section 3.01 hereof, (x) such waiver relates
to a default or a reasonably foreseeable default, (y) such waiver would maximize
recovery of total proceeds taking into account the value of such prepayment
penalty and related Mortgage Loan and (z) doing so is standard and customary in
servicing similar Mortgage Loans (including any waiver of a prepayment penalty
in connection with a refinancing of a Mortgage Loan that is related to a default
or a reasonably foreseeable default), or (iv) sufficient information is not made
available to enable it to collect the prepayment penalty. Except as provided in
the preceding sentence, in no event will the Servicer waive a prepayment penalty
in connection with a refinancing of a Mortgage Loan that is not related to a
default or a reasonably foreseeable default. If the Servicer waives or does not
collect all or a portion of a prepayment penalty relating to a Principal
Prepayment in full or in part due to any action or omission of the Servicer,
other than as provided above, the Servicer shall deposit the amount of such
prepayment penalty (or such portion thereof as had been waived for deposit) into
the Collection Account for distribution in accordance with the terms of this
Agreement.

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         (c) The Servicer shall not be required to institute or join in
litigation with respect to collection of any payment (whether under a Mortgage,
Mortgage Note or otherwise or against any public or governmental authority with
respect to a taking or condemnation) if it reasonably believes that enforcing
the provision of the Mortgage or other instrument pursuant to which such payment
is required is prohibited by applicable law.

         (d) The Servicer shall establish and initially maintain, on behalf of
the Trustee for the benefit of the Certificateholders, the Collection Account.
The Servicer shall deposit into the Collection Account daily, within two
Business Days of receipt thereof, in immediately available funds, the following
payments and collections received or made by it on and after the Cut-Off Date
with respect to the Mortgage Loans:

                  (i) all payments on account of principal, including Principal
         Prepayments, on the Mortgage Loans, other than principal due on the
         Mortgage Loans on or prior to the Cut-off Date;

                  (ii) all payments on account of interest on the Mortgage Loans
         net of the related Servicing Fee permitted under Section 3.15, other
         than interest due on the Mortgage Loans on or prior to the Cut-off
         Date;

                  (iii) all Liquidation Proceeds, other than proceeds to be
         applied to the restoration or repair of the Mortgaged Property (or
         Underlying Mortgaged Property, in the case of a Co-op Loan) or released
         to either the Mortgagor or the holder of a senior lien on the Mortgaged
         Property (or Underlying Mortgaged Property, in the case of a Co-op
         Loan) in accordance with the Servicer's normal servicing procedures;

                  (iv) all Subsequent Recoveries;

                  (v) all Compensating Interest;

                  (vi) any amount required to be deposited by the Servicer
         pursuant to Section 3.05(g) in connection with any losses on Permitted
         Investments;

                  (vii) any amounts required to be deposited by the Servicer
         pursuant to Section 3.10 hereof;

                  (viii) all Purchase Prices and Substitution Adjustment
         Amounts;

                  (ix) all Advances made by the Servicer pursuant to Section
         4.01;

                  (x) all prepayment penalties; and

                  (xi) any other amounts required to be deposited hereunder.

         The foregoing requirements for remittance by the Servicer into the
Collection Account shall be exclusive, it being understood and agreed that,
without limiting the generality of the foregoing, all servicing related fees
including all late payment charges, insufficient funds charges, customary real
estate referral fees and payments in the nature of assumption fees (i.e. fees
related to the assumption of a Mortgage Loan upon the purchase of the related
Mortgaged Property or stock allocated to a dwelling unit in the case of a Co-op
Loan), modification fees, extension fees and other similar ancillary fees and
charges (other than prepayment penalties) if collected, need not be remitted by
the Servicer. Rather, such fees and charges and similar amounts may be retained
by the Servicer as additional servicing compensation. In the event that the
Servicer shall remit any amount not required to be remitted and not

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otherwise subject to withdrawal pursuant to Section 3.08 hereof, it may at any
time withdraw or direct the Trustee, or such other institution maintaining the
Collection Account, to withdraw such amount from the Collection Account, any
provision herein to the contrary notwithstanding. The Servicer shall maintain
adequate records with respect to all withdrawals made pursuant to this Section.
All funds deposited in the Collection Account shall be held in trust for the
Certificateholders until withdrawn in accordance with Section 3.08. In no event
shall the Trustee incur liability for withdrawals from the Collection Account at
the direction of the Servicer.

         The Servicer shall give notice to the NIMs Insurer and the Trustee of
the location of the Collection Account maintained by it when established and
prior to any change thereof. Not later than twenty days after each Distribution
Date, the Servicer shall forward to the NIMs Insurer and, upon request, to the
Trustee and the Depositor the most current available bank statement for the
Collection Account. Copies of such statement shall be provided by the Trustee to
any Certificateholder and to any Person identified to the Trustee as a
prospective transferee of a Certificate, upon request at the expense of the
requesting party, provided such statement is delivered by the Servicer to the
Trustee.

         (e) [RESERVED].

         (f) The Trustee shall establish and maintain, on behalf of the
Certificateholders, the Certificate Account. The Trustee shall, promptly upon
receipt, deposit or cause to be deposited in the Certificate Account and retain
therein the following:

                  (i) the aggregate amount withdrawn by the Servicer from the
         Collection Account and required to be deposited in the Certificate
         Account;

                  (ii) any amount required to be deposited by the Trustee
         pursuant to Section 3.05(g) in connection with any losses on Permitted
         Investments; and

                  (iii) the Optional Termination Amount paid by the winning
         bidder at the Auction to the Trustee, or by the NIMs Insurer or the
         Servicer pursuant to Section 9.01.

         Any amounts received by the Trustee prior to 3:00 p.m. New York City
time (or such earlier deadline for investment in the Permitted Investments
designated by the Trustee) which are required to be deposited in the Certificate
Account by the Servicer shall be invested in Permitted Investments on the
Business Day on which they were received. The foregoing requirements for
remittance by the Servicer and deposit by the Servicer into the Certificate
Account shall be exclusive. In the event that the Servicer shall remit any
amount not required to be remitted and not otherwise subject to withdrawal
pursuant to Section 3.08 hereof, it may at any time withdraw such amount from
the Certificate Account, any provision herein to the contrary notwithstanding.
All funds deposited in the Certificate Account shall be held by the Trustee in
trust for the Certificateholders until disbursed in accordance with this
Agreement or withdrawn in accordance with Section 3.08. In no event shall the
Trustee incur liability for withdrawals from the Certificate Account at the
direction of the Servicer. The Trustee shall give notice to the NIMs Insurer and
the Servicer of the location of the Certificate Account maintained by it when
established and prior to any change thereof.

         (g) Each institution that maintains the Collection Account or the
Certificate Account shall invest the funds in each such account, as directed by
the Servicer or the Trustee, as applicable, in writing, in Permitted
Investments, which shall mature not later than (i) in the case of the Collection
Account the Business Day preceding the related Servicer Remittance Date (except
that if such Permitted Investment is an obligation of the institution that
maintains such Collection Account or is otherwise immediately available, then
such Permitted Investment shall mature not later than the Servicer Remittance
Date) and (ii) in the case of the Certificate Account, the Business Day
immediately preceding the first Distribution

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Date that follows the date of such investment (except that if such Permitted
Investment is an obligation of the institution that maintains such Certificate
Account or is otherwise immediately available, then such Permitted Investment
shall mature not later than such Distribution Date) and, in each case, shall not
be sold or disposed of prior to its maturity. All such Permitted Investments
shall be made in the name of the Servicer or the Trustee, as applicable, for the
benefit of the Certificateholders. All income and gain net of any losses
realized from amounts on deposit in the Collection Account shall be for the
benefit of the Servicer as servicing compensation and shall be remitted to or
withdrawn by it monthly as provided herein. The amount of any losses incurred in
the Collection Account in respect of any such investments shall be deposited by
the Servicer in the Collection Account out of the Servicer's own funds
immediately as realized. All income and gain net of any losses realized from
amounts on deposit in the Certificate Account shall be for the benefit of the
Trustee and shall be remitted to or withdrawn by it monthly as provided herein.
The amount of any losses incurred in the Certificate Account in respect of any
such investments shall be deposited by the Trustee, in the Certificate Account
out of the Trustee's own funds immediately as realized.

        (h) All income and gain net of any losses realized from amounts on
deposit in the Certificate Account shall be for the benefit of (i) the Servicer
to the extent such income and gain (net of any losses) relates to the period
from the Servicer Remittance Date to but not including the 18th day of the
month or if such day is not a Business Day, the next Business Day and (ii) the
Trustee to the extent such income and gain (net of any losses) relates to any
other period. Any amounts in such Collection Account earned for the benefit of
the Servicer shall be remitted by the Trustee to the Servicer not later than
the third Business Day of the month immediately succeeding the month in which
such amounts were earned. The amount of any losses incurred in the Certificate
Account in respect of any such investments shall be deposited by the Trustee,
in the Certificate Account out of the Trustee's own funds immediately as
realized; provided that the Trustee shall be reimbursed by the Servicer for any
such losses which relate to the period from the Servicer Remittance Date to but
not including the 18th day of the month or if such day is not a Business Day,
the next Business Day prior to the Distribution Date.

         SECTION 3.06. Collection of Taxes, Assessments and Similar Items;
Escrow Accounts.

         To the extent required by the related Mortgage Note, the Servicer shall
establish and maintain one or more accounts (each, an "Escrow Account") and
deposit and retain therein all collections from the Mortgagors (or advances by
the Servicer) for the payment of taxes, assessments, hazard insurance premiums
or comparable items for the account of the Mortgagors. Nothing herein shall
require the Servicer to compel a Mortgagor to establish an Escrow Account in
violation of applicable law.

         Withdrawals of amounts so collected from the Escrow Accounts may be
made only to effect timely payment of taxes, assessments, hazard insurance
premiums, condominium or PUD association dues, or comparable items, to reimburse
the Servicer out of related collections for any payments made pursuant to
Sections 3.01 hereof (with respect to taxes and assessments and insurance
premiums) and 3.10 hereof (with respect to hazard insurance), to refund to any
Mortgagors any sums as may be determined to be overages, to pay interest to
itself, or, if required by law or the terms of the related Mortgage or Mortgage
Note, certain Mortgagors on balances in the Escrow Account, to withdraw funds
deposited in error or amounts previously deposited but returned as unpaid due to
a "not sufficient funds" or other denial by the related Mortgagor's banking
institution or to clear and terminate the Escrow Account at the termination of
this Agreement in accordance with Section 9.01 hereof. The Escrow Accounts shall
not be a part of the Trust Fund.

         SECTION 3.07. Access to Certain Documentation and Information Regarding
the Mortgage Loans.

         Upon reasonable advance notice in writing if required by federal
regulation, the Servicer will provide to each Certificateholder that is a
savings and loan association, bank or insurance company certain reports and
reasonable access to information and documentation regarding the Mortgage Loans
sufficient to permit such Certificateholder to comply with applicable
regulations of the OTS or other regulatory authorities with respect to
investment in the Certificates; provided, that the Servicer shall be entitled to
be reimbursed by each such Certificateholder for actual expenses incurred by the
Servicer in providing such reports and access.

         SECTION 3.08. Permitted Withdrawals from the Collection Account and
Certificate Account.

         (a) The Servicer may from time to time, make withdrawals from the
Collection Account for the following purposes:

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                  (i) to pay to the Servicer (to the extent not previously paid
         to or withheld by the Servicer), as servicing compensation in
         accordance with Section 3.15, that portion of any payment or recovery
         of interest on a Mortgage Loan that equals the Servicing Fee for the
         period with respect to which such interest payment or recovery was made
         or allocated, and, as additional servicing compensation, those other
         amounts set forth in Section 3.15;

                  (ii) to reimburse the Servicer for Advances and Servicing
         Advances (to the extent such Servicing Advances would constitute
         "unanticipated expenses" within the meaning of Treasury Regulation
         Section 1.860G-1(b)(3)(ii) if paid by one of the REMICs provided for
         herein) occurring after the Cut-off Date made by it with respect to the
         Mortgage Loans, such right of reimbursement pursuant to this subclause
         (ii) being limited to any amounts received on particular Mortgage
         Loan(s) (including, for this purpose, Condemnation Proceeds, Insurance
         Proceeds or Liquidation Proceeds) that represent late recoveries of
         payments of principal and/or interest on such particular Mortgage
         Loan(s) in respect of which any such Advance was made;

                  (iii) to reimburse the Servicer for any Non-Recoverable
         Advance previously made and, to the extent that such Non-Recoverable
         Servicing Advances would constitute "unanticipated expenses" within the
         meaning of Treasury Regulation Section 1.860G-1(b)(3)(ii) if paid by
         one of the REMICs provided for herein, any Non-Recoverable Servicing
         Advance;

                  (iv) to pay to the Servicer earnings on or investment income
         with respect to funds in or credited to the Collection Account;

                  (v) to reimburse the Servicer from Insurance Proceeds for
         Insured Expenses covered by the related Insurance Policy;

                  (vi) to pay the Servicer any unpaid Servicing Fees and to
         reimburse it for any unreimbursed Servicing Advances, the Servicer's
         right to reimbursement of Servicing Advances pursuant to this subclause
         (vi) with respect to any Mortgage Loan being limited to amounts
         received on particular Mortgage Loan(s)(including, for this purpose,
         Liquidation Proceeds and purchase and repurchase proceeds) that
         represent late recoveries of the payments for which such advances were
         made pursuant to Section 3.01 or Section 3.06;

                  (vii) to pay to the Depositor or the Servicer, as applicable,
         with respect to each Mortgage Loan or property acquired in respect
         thereof that has been purchased pursuant to Section 2.02, 2.03 or 3.12,
         all amounts received thereon and not taken into account in determining
         the related Stated Principal Balance of such repurchased Mortgage Loan;

                  (viii) to reimburse the Servicer or the Depositor for expenses
         incurred by either of them in connection with the Mortgage Loans or the
         Certificates and reimbursable pursuant to Section 3.25 or Section 6.03
         hereof;

                  (ix) to reimburse the Trustee for enforcement expenses
         reasonably incurred in respect of a breach or defect giving rise to the
         purchase obligation in Section 2.03 that were incurred in the Purchase
         Price of the Mortgage Loans, including any expenses arising out of the
         enforcement of the purchase obligation; provided that any such expenses
         will be reimbursable under this subclause (ix) only to the that such
         expenses would constitute "unanticipated expenses" within the meaning
         of Treasury Regulation Section 1.860G-1(b)(3)(ii) if paid by one of the
         REMICs provided for herein;

                  (x) to withdraw pursuant to Section 3.05 any amount deposited
         in the Collection Account and not required to be deposited therein;

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<PAGE>

                  (xi) to withdraw funds deposited in error or amounts
         previously deposited but returned as unpaid due to a "not sufficient
         funds" or other denial by the related Mortgagor's banking institution;
         and

                  (xii) to clear and terminate the Collection Account upon
         termination of this Agreement pursuant to Section 9.01 hereof; and

                  (xiii) to reimburse itself for Advances or Servicing Advances
         from amounts in the Collection Account held for future distributions
         that were not included in Available Funds for the preceding
         Distribution Date. An amount equal to the amount withdrawn from the
         Collection Account pursuant to this subclause (xiii) shall be deposited
         in the Collection Account by the Servicer on the next succeeding
         Distribution Date that funds are to be distributed to
         Certificateholders.

         In addition, no later than 12:00 noon Eastern Time on the Servicer
Remittance Date, the Servicer shall cause to be withdrawn from the Collection
Account the Interest Funds and the Principal Funds, to the extent on deposit,
and such amount shall be deposited in the Certificate Account; provided, however
if the Trustee does not receive such Interest Funds and Principal Funds by 2:00
p.m. Eastern Time, such Interest Funds and Principal Funds shall be deposited in
the Certificate Account on the next Business Day.

         The Servicer shall keep and maintain separate accounting, on a Mortgage
Loan by Mortgage Loan basis, for the purpose of justifying any withdrawal from
the Collection Account.

         The Servicer shall provide written notification to the Trustee and the
NIMs Insurer on or prior to the next succeeding Servicer Remittance Date upon
making any withdrawals from the Collection Account pursuant to subclauses (iii)
and (viii) above.

         In the event of any failure by the Servicer to remit to the Trustee for
deposit into the Certificate Account any amounts (including any Advance)
required to be so remitted by the Servicer on the Servicer Remittance Date, the
Servicer shall pay to the Trustee, for its own account, interest on such amounts
at the "prime rate" (as specified in the New York edition of The Wall Street
Journal) until such failure is remedied.

         Unless otherwise specified, any amounts reimbursable to the Servicer or
the Trustee from amounts on deposit in the Collection Account or the Certificate
Accounts shall be deemed to come from first, Interest Funds, and thereafter,
Principal Funds for the related Distribution Date.

         (b) The Trustee shall withdraw funds from the Certificate Account for
distribution to the Certificateholders in the manner specified in this Agreement
(and shall withhold from the amounts so withdrawn, the amount of any taxes that
it is authorized to retain pursuant to this Agreement). In addition, the Trustee
shall from time to time make withdrawals from the Certificate Account for the
following purposes:

                  (i) to withdraw any amount deposited in the Certificate
         Account and not required to be deposited therein;

                  (ii) to clear and terminate the Certificate Account upon
         termination of the Agreement pursuant to Section 9.01 hereof (after
         paying all amounts necessary to the Trustee or the Servicer in
         connection with any such termination);

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                  (iii) to reimburse the Trustee for expenses incurred by the
         Trustee and reimbursable pursuant to Section 8.06 hereof; and

                  (iv) to pay to the Trustee earnings on or investment income
         with respect to funds in or credited to the Certificate Account.

         SECTION 3.09. [RESERVED]. -

         SECTION 3.10. Maintenance of Hazard Insurance.

         The Servicer shall cause to be maintained, for each Mortgage Loan
(other than a Co-op Loan), fire and hazard insurance with extended coverage in
an amount that is at least equal to the lesser of (i) the replacement value of
the improvements that are part of such Mortgaged Property or (ii) the greater of
(a) the outstanding principal balance of the Mortgage Loan and (b) an amount
such that the proceeds of such policy shall be sufficient to prevent the related
Mortgagor and/or mortgagee from becoming a co-insurer or (iii) the amount
required under applicable HUD/FHA regulations. Each such policy of standard
hazard insurance shall contain, or have an accompanying endorsement that
contains, a standard mortgagee clause. The Servicer shall also cause flood
insurance to be maintained on property acquired upon foreclosure or deed in lieu
of foreclosure of any Mortgage Loan, to the extent described below. Pursuant to
Section 3.05 hereof, any amounts collected by the Servicer under any such
policies (other than the amounts to be applied to the restoration or repair of
the related Mortgaged Property or property thus acquired or amounts released to
the Mortgagor in accordance with the Servicer's normal servicing procedures)
shall be deposited in the Collection Account. Any cost incurred by the Servicer
in maintaining any such insurance shall not, for the purpose of calculating
monthly distributions to the Certificateholders or remittances to the Trustee
for their benefit, be added to the principal balance of the Mortgage Loan,
notwithstanding that the terms of the Mortgage Loan so permit. Such costs shall
be recoverable by the Servicer out of late payments by the related Mortgagor or
out of Liquidation Proceeds to the extent and as otherwise permitted by Section
3.08 hereof. It is understood and agreed that no earthquake or other additional
insurance is to be required of any Mortgagor or maintained on property acquired
in respect of a Mortgage other than pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such
additional insurance. If the Mortgaged Property is located at the time of
origination of the Mortgage Loan in a federally designated special flood hazard
area and such area is participating in the national flood insurance program, the
Servicer shall cause flood insurance to be maintained with respect to such
Mortgage Loan. Such flood insurance shall be in an amount equal to the lesser of
(i) the original principal balance of the related Mortgage Loan, (ii) the
replacement value of the improvements that are part of such Mortgaged Property,
or (iii) the maximum amount of such insurance available for the related
Mortgaged Property under the Flood Disaster Protection Act of 1973, as amended.

         In the event that the Servicer shall obtain and maintain a blanket
policy insuring against hazard losses on all of the Mortgage Loans, it shall
conclusively be deemed to have satisfied its obligations as set forth in the
first sentence of this Section 3.10, it being understood and agreed that such
policy may contain a deductible clause on terms substantially equivalent to
those commercially available and maintained by comparable servicers. If such
policy contains a deductible clause, the Servicer shall, in the event that there
shall not have been maintained on the related Mortgaged Property a policy
complying with the first sentence of this Section 3.10, and there shall have
been a loss that would have been covered by such policy, deposit in the
Collection Account the amount not otherwise payable under the blanket policy
because of such deductible clause. In connection with its activities as servicer
of the Mortgage Loans, the Servicer agrees to present, on behalf of itself, the
Depositor and the Trustee for the benefit of the Certificateholders, claims
under any such blanket policy.

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         SECTION 3.11. Enforcement of Due-On-Sale Clauses; Assumption
Agreements.

         (a) Except as otherwise provided in this Section 3.11(a), when any
property subject to a Mortgage has been or is about to be conveyed by the
Mortgagor, the Servicer shall to the extent that it has knowledge of such
conveyance, enforce any due-on-sale clause contained in any Mortgage Note or
Mortgage, but only to the extent that such enforcement will not adversely affect
or jeopardize coverage under any Required Insurance Policy; provided, however,
that the Servicer shall not exercise any such right if the due-on-sale clause,
in the reasonable belief of the Servicer, is not enforceable under applicable
law. An opinion of counsel, which shall be reimbursable as a Servicing Advance,
delivered to the Trustee and the Depositor shall conclusively establish the
reasonableness of such belief to the extent permitted under applicable law.
Notwithstanding the foregoing, the Servicer is not required to exercise such
rights with respect to a Mortgage Loan if the Person to whom the related
Mortgaged Property (or stock allocated to a dwelling unit, in the case of a
Co-op Loan) has been conveyed or is proposed to be conveyed satisfies the terms
and conditions contained in the Mortgage Note and Mortgage related thereto and
the consent of the mortgagee under such Mortgage Note or Mortgage is not
otherwise so required under such Mortgage Note or Mortgage as a condition to
such transfer. In the event that the Servicer is prohibited by law from
enforcing any such due-on-sale clause, or if coverage under any Required
Insurance Policy would be adversely affected, or if nonenforcement is otherwise
permitted hereunder, the Servicer is authorized, subject to Section 3.11(b), to
take or enter into an assumption and modification agreement from or with the
Person to whom such property has been or is about to be conveyed, pursuant to
which such Person becomes liable under the Mortgage Note and, unless prohibited
by applicable state law, the Mortgagor remains liable thereon, provided that the
Mortgage Loan shall continue to be covered (if so covered before the Servicer
enters such agreement) by the applicable Required Insurance Policies. The
Servicer, subject to Section 3.11(b), is also authorized with the prior approval
of the insurers under any Required Insurance Policies to enter into a
substitution of liability agreement with such Person, pursuant to which the
original Mortgagor is released from liability and such Person is substituted as
Mortgagor and becomes liable under the Mortgage Note. Notwithstanding the
foregoing, the Servicer shall not be deemed to be in default under this Section
3.11(a) by reason of any transfer or assumption that the Servicer reasonably
believes it is restricted by law from preventing.

         (b) Subject to the Servicer's duty to enforce any due-on-sale clause to
the extent set forth in Section 3.11(a) hereof, in any case in which a Mortgaged
Property (or stock allocated to a dwelling unit, in the case of Co-op Loan) has
been conveyed to a Person by a Mortgagor, and such Person is to enter into an
assumption agreement or modification agreement or supplement to the Mortgage
Note or Mortgage that requires the signature of the Trustee, or if an instrument
of release signed by the Trustee is required releasing the Mortgagor from
liability on the Mortgage Loan, the Servicer shall prepare and deliver or cause
to be prepared and delivered to the Trustee for signature and shall direct, in
writing, the Trustee to execute the assumption agreement with the Person to whom
the Mortgaged Property (or the stock allocated to a dwelling unit, in the case
of a Co-op Loan) is to be conveyed and such modification agreement or supplement
to the Mortgage Note or Mortgage or other instruments as are reasonable or
necessary to carry out the terms of the Mortgage Note or Mortgage or otherwise
to comply with any applicable laws regarding assumptions or the transfer of the
Mortgaged Property (or stock allocated to a dwelling unit, in the case of a
Co-op Loan) to such Person. In connection with any such assumption, no material
term of the Mortgage Note (including, but not limited to, the Mortgage Rate, the
amount of the Scheduled Payment, the Maximum Rate, the Minimum Rate, the Gross
Margin, the Periodic Rate Cap, the Adjustment Date, any prepayment penalty and
any other term affecting the amount or timing of payment on the Mortgage Loan)
may be changed. The Servicer shall notify the Trustee and the NIMs Insurer that
any such substitution or assumption agreement has been completed by forwarding
to the Trustee (with a copy to the NIMs Insurer) the original of such
substitution or assumption agreement, which in the case of the original shall be
added to the related Mortgage File and shall, for all purposes, be considered a
part of such Mortgage File to the same extent as all other documents and
instruments constituting a part thereof. Any fee collected by the Servicer for
entering into an assumption or substitution of liability agreement will be
retained by the Servicer as additional servicing compensation.

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         SECTION 3.12. Realization Upon Defaulted Mortgage Loans; Determination
of Excess Proceeds.

         (a) The Servicer shall use reasonable efforts consistent with the
servicing standard set forth in Section 3.01 to foreclose upon or otherwise
comparably convert the ownership of properties securing such of the Mortgage
Loans as come into and continue in default and as to which no satisfactory
arrangements can be made for collection of Delinquent payments. In connection
with such foreclosure or other conversion, the Servicer shall follow such
practices and procedures as it shall deem necessary or advisable and as shall be
normal and usual in its general mortgage servicing activities and the
requirements of the insurer under any Required Insurance Policy; provided,
however, that the Servicer shall not be required to expend its own funds in
connection with the restoration of any property that shall have suffered damage
due to an uninsured cause unless it shall determine (i) that such restoration
will increase the proceeds of liquidation of the Mortgage Loan after
reimbursement to itself of such expenses and (ii) that such expenses will be
recoverable to it through Liquidation Proceeds (respecting which it shall have
priority for purposes of withdrawals from the Collection Account pursuant to
Section 3.08 hereof). The Servicer shall be responsible for all other costs and
expenses incurred by it in any such proceedings; provided, however, that it
shall be entitled to reimbursement thereof from the proceeds of liquidation of
the related Mortgaged Property (or stock allocated to a dwelling unit, in the
case of a Co-op Loan), as contemplated in Section 3.08 hereof. If the Servicer
has knowledge that a Mortgaged Property (or Underlying Mortgaged Property, in
the case of a Co-op Loan) that the Servicer is contemplating acquiring in
foreclosure or by deed-in-lieu of foreclosure is located within a one-mile
radius of any site with environmental or hazardous waste risks known to the
Servicer, the Servicer will, prior to acquiring the Mortgaged Property (or stock
allocated to a dwelling unit, in the case of a Co-op Loan), consider such risks
and only take action in accordance with Accepted Servicing Practices.

         With respect to any REO Property, the deed or certificate of sale shall
be taken in the name of the Trustee or its nominee. Pursuant to its efforts to
sell such REO Property, the Servicer shall either itself or through an agent
selected by the Servicer protect and conserve such REO Property in the same
manner and to such extent as is customary in the locality where such REO
Property is located and may, incident to its conservation and protection of the
interests of the Certificateholders, rent the same, or any part thereof, as the
Servicer deems to be in the best interest of the Servicer and the
Certificateholders for the period prior to the sale of such REO Property. The
Servicer or its affiliate may receive usual and customary real estate referral
fees for real estate brokers in connection with the listing and disposition of
REO Property. The Servicer shall prepare a statement with respect to each REO
Property that has been rented showing the aggregate rental income received and
all expenses incurred in connection with the management and maintenance of such
REO Property at such times as is necessary to enable the Servicer to comply with
the reporting requirements of the REMIC Provisions. The net monthly rental
income, if any, from such REO Property shall be deposited in the Collection
Account no later than the close of business on each Determination Date. The
Servicer shall perform the tax reporting and withholding related to
foreclosures, abandonments and cancellation of indebtedness income as specified
by Sections 1445, 6050J and 6050P of the Code by preparing and filing such tax
and information returns, as may be required.

         In the event that the Trust Fund acquires any Mortgaged Property (or
stock allocated to a dwelling unit, in the case of a Co-op Loan) as aforesaid or
otherwise in connection with a default or imminent default on a Mortgage Loan,
the Servicer shall dispose of such Mortgaged Property (or stock allocated to a
dwelling unit, in the case of a Co-op Loan) prior to the expiration of three
years from the end of the year of its acquisition by the Trust Fund or, at the
expense of the Trust Fund, request more than 60 days prior to the day on which
such three-year period would otherwise expire, an extension of the three-year
grace period unless the Trustee and the NIMs Insurer shall have been supplied
with an Opinion of Counsel (such Opinion of Counsel not to be an expense of the
Trustee or the NIMs Insurer) to the

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<PAGE>

effect that the holding by the Trust Fund of such Mortgaged Property (or stock
allocated to a dwelling unit, in the case of a Co-op Loan) subsequent to such
three-year period will not result in the imposition of taxes on "prohibited
transactions" of the Trust Fund or any of the REMICs provided for herein as
defined in section 860F of the Code or cause any of the REMICs provided for
herein to fail to qualify as a REMIC at any time that any Certificates are
outstanding, in which case the Trust Fund may continue to hold such Mortgaged
Property (or stock allocated to a dwelling unit, in the case of Co-op Loan)
(subject to any conditions contained in such Opinion of Counsel).
Notwithstanding any other provision of this Agreement, no Mortgaged Property (or
stock allocated to a dwelling unit, in the case of Co-op Loan) acquired by the
Trust Fund shall be rented (or allowed to continue to be rented) or otherwise
used for the production of income by or on behalf of the Trust Fund in such a
manner or pursuant to any terms that would (i) cause such Mortgaged Property(or
stock allocated to a dwelling unit, in the case of Co-op Loan) to fail to
qualify as "foreclosure property" within the meaning of section 860G(a)(8) of
the Code or (ii) subject the Trust Fund or any REMIC provided for herein to the
imposition of any federal, state or local income taxes on the income earned from
such Mortgaged Property (or stock allocated to a dwelling unit, in the case of
Co-op Loan) under section 860G(c) of the Code or otherwise, unless the Servicer
or the Depositor has agreed to indemnify and hold harmless the Trust Fund with
respect to the imposition of any such taxes.

         The decision of the Servicer to foreclose on a defaulted Mortgage Loan
shall be subject to a determination by the Servicer that the proceeds of such
foreclosure would exceed the costs and expenses of bringing such a proceeding.
The income earned from the management of any Mortgaged Properties acquired
through foreclosure or other judicial proceeding, net of reimbursement to the
Servicer for expenses incurred (including any property or other taxes) in
connection with such management and net of unreimbursed Servicing Fees,
Advances, Servicing Advances and any management fee paid or to be paid with
respect to the management of such Mortgaged Property (or stock allocated to a
dwelling unit, in the case of Co-op Loan), shall be applied to the payment of
principal of, and interest on, the related defaulted Mortgage Loans (with
interest accruing as though such Mortgage Loans were still current) and all such
net income shall be deemed, for all purposes in this Agreement, to be payments
on account of principal and interest on the related Mortgage Notes and shall be
deposited into the Collection Account. To the extent that any such net income
received during a Prepayment Period is in excess of the amount attributable to
amortizing principal and accrued interest at the related Mortgage Rate on the
related Mortgage Loan, such excess shall be considered to be a partial Principal
Prepayment for all purposes hereof.

         The Liquidation Proceeds from any liquidation of a Mortgage Loan, net
of any payment to the Servicer as provided above, shall be deposited in the
Collection Account on the next succeeding Determination Date following receipt
thereof for distribution on the related Distribution Date.

         The proceeds of any Liquidated Loan, as well as any recovery resulting
from a partial collection of Liquidation Proceeds and any net income from an REO
Property, will be applied in the following order of priority: first, to
reimburse the Servicer for any related unreimbursed Servicing Advances and
unpaid Servicing Fees, pursuant to Section 3.08(a)(vi) or this Section 3.12;
second, to reimburse the Servicer for any unreimbursed Advances, pursuant to
Section 3.08(a)(ii) or this Section 3.12; third, to any prepayment penalties and
then to accrued and unpaid interest (to the extent no Advance has been made for
such amount) on the Mortgage Loan or related REO Property, at the applicable Net
Mortgage Rate to the Due Date occurring in the month in which such amounts are
required to be distributed; and fourth, as a recovery of principal of the
Mortgage Loan.

         (b) On each Determination Date, the Servicer shall determine the
respective aggregate amounts of Excess Proceeds, if any, that occurred in the
related Prepayment Period.

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<PAGE>

         (c) The Servicer, in its sole discretion, shall have the right to elect
(by written notice sent to the Trustee) to purchase for its own account from the
Trust Fund any Mortgage Loan that is 90 days or more Delinquent or REO Property
for which the Servicer has accepted a deed-in-lieu of foreclosure at a price
equal to the Purchase Price. The Purchase Price for any Mortgage Loan or REO
Property purchased hereunder shall be delivered to the Trustee for deposit in
the Certificate Account and the Trustee, upon receipt of such deposit and a
Request for Release from the Depositor in the form of Exhibit I hereto, shall
release or cause to be released to the Servicer the related Mortgage File and
shall execute and deliver such instruments of transfer or assignment prepared by
the Servicer, in each case without recourse, representation or warranty, as
shall be necessary to vest in the Servicer any Mortgage Loan or REO Property
released pursuant hereto and the Servicer shall succeed to all the Trustee's
right, title and interest in and to such Mortgage Loan and all security and
documents related thereto. Such assignment shall be an assignment outright and
not for security. The Servicer shall thereupon own such Mortgage Loan or REO
Property, and all security and documents, free of any further obligation to the
Trustee or the Certificateholders with respect thereto. The Servicer shall not
use any procedure in selecting Mortgage Loans to be repurchased which is
materially adverse to the interests of the Certificateholders.

         In the event that the initial Servicer is acting as the servicer and
the Servicer (or an affiliate of the Servicer) is the owner of more than 50% of
the Class of Certificates which is then currently in a first loss position and
such party is deemed to be the "Primary Beneficiary" as defined in FIN 40, the
provisions of the preceding paragraph shall not apply and the Servicer (or an
affiliate of the Servicer), in its sole discretion, shall have the right to
elect to purchase for its own account from the Trust Fund any Mortgage Loan that
is 120 days or more Delinquent or REO Property for which the Servicer has
accepted a deed-in-lieu of foreclosure, during the period commencing on the
first day of the calendar quarter succeeding the calendar quarter in which the
Initial Delinquency Date (as defined below) occurred with respect to such
Mortgage Loan and ending on the last Business Day of such calendar quarter. If
the Servicer (or an affiliate of the Servicer) does not exercise its purchase
right with respect to a Mortgage Loan during the period specified in the
preceding sentence, such Mortgage Loan shall thereafter again become eligible
for purchase pursuant to the preceding sentence only after the Mortgage Loan
ceases to be 120 days or more Delinquent and thereafter becomes 120 days
Delinquent again. The "Initial Delinquency Date" of a Mortgage Loan shall mean
the date on which the Mortgage Loan first became 120 days Delinquent. Prior to
repurchase pursuant to this Section 3.12, the Servicer shall be required to
continue to make monthly advances pursuant to Section 4.01. The Servicer shall
not use any procedure in selecting Mortgage Loans to be repurchased which is
materially adverse to the interests of the Certificateholders. The Servicer
shall purchase any Mortgage Loan or REO Property pursuant to this paragraph at a
price equal to the Purchase Price. The Purchase Price for any Mortgage Loan or
REO Property purchased hereunder shall be delivered to the Trustee for deposit
in the Certificate Account and the Trustee, upon receipt of such deposit and a
Request for Release from the Depositor in the form of Exhibit I hereto, shall
release or cause to be released to the Servicer the related Mortgage File and
shall execute and deliver such instruments of transfer or assignment prepared by
the Servicer, in each case without recourse, representation or warranty, as
shall be necessary to vest in the Servicer any Mortgage Loan or REO Property
released pursuant hereto and the Servicer shall succeed to all the Trustee's
right, title and interest in and to such Mortgage Loan and all security and
documents related thereto. The provisions in this paragraph shall only apply if
Litton Loan Servicing LP is the servicer.

         (d) The Servicer may write-off any second lien Mortgage Loan that has
been Delinquent for a period of 180 days or more, provided that the Servicer has
certified in a certificate of an officer of the Servicer delivered to the
Depositor and the Trustee that it does not believe that there is a reasonable
likelihood that any further net proceeds will be received or recovered with
respect to such Mortgage Loan.

         SECTION 3.13. Trustee to Cooperate; Release of Mortgage Files.

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<PAGE>

         Upon the payment in full of any Mortgage Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer will promptly notify the Trustee or
its designee by delivering a Request for Release substantially in the form of
Exhibit I. Upon receipt of two copies of such request, the Trustee or its
designee shall promptly release the related Mortgage File to the Servicer, and
the Trustee or its designee shall at the Servicer's written direction execute
and deliver to the Servicer the request for reconveyance, deed of reconveyance
or release or satisfaction of mortgage or such instrument releasing the lien of
the Mortgage in each case provided by the Servicer, together with the Mortgage
Note with written evidence of cancellation thereon. No expenses incurred in
connection with any instrument of satisfaction or deed of reconveyance shall be
chargeable to the Collection Account, the Certificate Account or the related
subservicing account. From time to time and as shall be appropriate for the
servicing or foreclosure of any Mortgage Loan, including for such purpose,
collection under any policy of flood insurance, any fidelity bond or errors or
omissions policy, or for the purposes of effecting a partial release of any
Mortgaged Property (or stock allocated to a dwelling unit, in the case of Co-op
Loan) from the lien of the Mortgage or the making of any corrections to the
Mortgage Note or the Mortgage or any of the other documents included in the
Mortgage File, the Trustee or its designee shall, upon delivery to the Trustee
or its designee of a Request for Release in the form of Exhibit I signed by a
Servicing Officer, release the Mortgage File to the Servicer. Subject to the
further limitations set forth below, the Servicer shall cause the Mortgage File
or documents so released to be returned to the Trustee or its designee when the
need therefor by the Servicer no longer exists, unless the Mortgage Loan is
liquidated and the proceeds thereof are deposited in the Collection Account, in
which case the Trustee or its designee shall deliver the Request for Release to
the Servicer.

         Each Request for Release may be delivered to the Trustee or its
designee (i) via mail or courier, (ii) via facsimile or (iii) by such other
means, including, without limitation, electronic or computer readable medium, as
the Servicer and the Trustee or its designee shall mutually agree. The Trustee
or its designee shall promptly release the related Mortgage File(s) within five
(5) Business Days of receipt of a properly completed Request for Release
pursuant to clauses (i), (ii) or (iii) above. Receipt of a properly completed
Request for Release shall be authorization to the Trustee or its designee to
release such Mortgage Files, provided the Trustee or its designee has determined
that such Request for Release has been executed, with respect to clauses (i) or
(ii) above, or approved, with respect to clause (iii) above, by an authorized
Servicing Officer of the Servicer, and so long as the Trustee or its designee
complies with its duties and obligations under the agreement. If the Trustee or
its designee is unable to release the Mortgage Files within the period
previously specified, the Trustee or its designee shall immediately notify the
Servicer indicating the reason for such delay. If the Servicer is required to
pay penalties or damages due to the Trustee or its designee's negligent failure
to release the related Mortgage File or the Trustee or its designee's negligent
failure to execute and release documents in a timely manner, the Trustee or its
designee, shall be liable for such penalties or damages respectively caused by
it.

         On each day that the Servicer remits to the Trustee or its designee
Requests for Releases pursuant to clauses (ii) or (iii) above, the Servicer
shall also submit to the Trustee or its designee a summary of the total amount
of such Requests for Releases requested on such day by the same method as
described in such clauses (ii) and (iii) above.

         If the Servicer at any time seeks to initiate a foreclosure proceeding
in respect of any Mortgaged Property (or stock allocated to a dwelling unit, in
the case of Co-op Loan) as authorized by this Agreement, the Servicer shall
deliver or cause to be delivered to the Trustee or its designee, for signature,
as appropriate, any court pleadings, requests for trustee's sale or other
documents necessary to effectuate such foreclosure or any legal action brought
to obtain judgment against the Mortgagor on the Mortgage Note or the Mortgage or
to obtain a deficiency judgment or to enforce any other remedies or rights
provided by the Mortgage Note or the Mortgage or otherwise available at law or
in equity. Notwithstanding the foregoing, the Servicer shall cause possession of
any Mortgage File or of the

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documents therein that shall have been released by the Trustee or its designee
to be returned to the Trustee promptly after possession thereof shall have been
released by the Trustee or its designee unless (i) the Mortgage Loan has been
liquidated and the Liquidation Proceeds relating to the Mortgage Loan have been
deposited in the Collection Account, and the Servicer shall have delivered to
the Trustee or its designee a Request for Release in the form of Exhibit I or
(ii) the Mortgage File or document shall have been delivered to an attorney or
to a public trustee or other public official as required by law for purposes of
initiating or pursuing legal action or other proceedings for the foreclosure of
the Mortgaged Property (or stock allocated to a dwelling unit, in the case of
Co-op Loan) and the Servicer shall have delivered to the Trustee or its designee
an Officer's Certificate of a Servicing Officer certifying as to the name and
address of the Person to which the Mortgage File or the documents therein were
delivered and the purpose or purposes of such delivery.

         SECTION 3.14. Documents, Records and Funds in Possession of Servicer to
be Held for the Trustee.

         All Mortgage Files and funds collected or held by, or under the control
of, the Servicer in respect of any Mortgage Loans, whether from the collection
of principal and interest payments or from Liquidation Proceeds, including but
not limited to, any funds on deposit in the Collection Account, shall be held by
the Servicer for and on behalf of the Trustee and shall be and remain the sole
and exclusive property of the Trustee, subject to the applicable provisions of
this Agreement. The Servicer also agrees that it shall not create, incur or
subject any Mortgage File or any funds that are deposited in the Collection
Account or Certificate Account or in any Escrow Account, or any funds that
otherwise are or may become due or payable to the Trustee for the benefit of the
Certificateholders, to any claim, lien, security interest, judgment, levy, writ
of attachment or other encumbrance, or assert by legal action or otherwise any
claim or right of set off against any Mortgage File or any funds collected on,
or in connection with, a Mortgage Loan, except, however, that the Servicer shall
be entitled to set off against and deduct from any such funds any amounts that
are properly due and payable to the Servicer under this Agreement.

         SECTION 3.15. Servicing Compensation.

         As compensation for its activities hereunder, the Servicer shall be
entitled to retain or withdraw from the Collection Account out of each payment
or recovery of interest on a Mortgage Loan included in the Trust Fund an amount
equal to interest at the Servicing Fee Rate on the Stated Principal Balance of
the related Mortgage Loan as of the immediately preceding Distribution Date.

         Additional servicing compensation in the form of any Excess Proceeds,
late payment fees, assumption fees (i.e. fees related to the assumption of a
Mortgage Loan upon the purchase of the related Mortgaged Property (or stock
allocated to a dwelling unit, in the case of Co-op Loan)), modification fees,
extension fees and similar fees payable by the Mortgagor, and all income and
gain net of any losses realized from Permitted Investments in the Collection
Account shall be retained by the Servicer to the extent not required to be
deposited in the Collection Account pursuant to Sections 3.05 or 3.12(a) hereof.
The Servicer shall be required to pay all expenses incurred by it in connection
with its servicing activities hereunder (including payment of any premiums for
hazard insurance, as required by Section 3.10 hereof and maintenance of the
other forms of insurance coverage required by Section 3.10 hereof) and shall not
be entitled to reimbursement therefor except as specifically provided in
Sections 3.08 and 3.12 hereof.

         SECTION 3.16. Access to Certain Documentation.

         The Servicer shall provide to the OTS and the FDIC and to comparable
regulatory authorities supervising Holders of the Certificates and the examiners
and supervisory agents of the OTS, the FDIC and such other authorities, access
to the documentation regarding the Mortgage Loans required by applicable
regulations of the OTS and the FDIC. Such access shall be afforded without
charge, but only

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upon reasonable and prior written request and during normal business hours at
the offices of the Servicer designated by it; provided, that the Servicer shall
be entitled to be reimbursed by each such Certificateholder for actual expenses
incurred by the Servicer in providing such reports and access. Nothing in this
Section shall limit the obligation of the Servicer to observe any applicable law
prohibiting disclosure of information regarding the Mortgagors and the failure
of the Servicer to provide access as provided in this Section as a result of
such obligation shall not constitute a breach of this Section.

         SECTION 3.17. Annual Statement as to Compliance.

         Pursuant to this Agreement, the Servicer shall deliver to the
Depositor, the Trustee and the NIMs Insurer, on or before March 15 of each year
beginning in 2005 or such other date in order to remain in compliance with the
Section 302 Requirements, an Officer's Certificate stating, as to each signatory
thereof, that (i) a review of the activities of the Servicer during the
preceding calendar year and of performance under this Agreement has been made
under such officer's supervision, and (ii) to the best of such officers'
knowledge, based on such review, the Servicer has fulfilled all of its
obligations under this Agreement throughout such year, or, if there has been a
default in the fulfillment of any such obligation, specifying each such default
known to such officers and the nature and status thereof. The Trustee shall
forward a copy of each such statement to each Rating Agency. Copies of such
statement shall be provided by the Trustee to any Certificateholder upon written
request at the Certificateholder's expense, provided such statement has been
delivered by the Servicer to the Trustee.

         SECTION 3.18. Annual Independent Public Accountants' Servicing
Statement; Financial Statements.

         On or before March 15 of each year, beginning in 2005 or such other
date in order to remain in compliance with the Section 302 Requirements, the
Servicer at its expense shall cause a nationally recognized firm of independent
public accountants (who may also render other services to the Servicer or any
Affiliate thereof) that is a member of the American Institute of Certified
Public Accountants to furnish a USAP Report to the Trustee and the Depositor.
Copies of the USAP Report shall be provided by the Trustee to any
Certificateholder upon request at the Certificateholder's expense, provided such
report has been delivered by the Servicer to the Trustee. The Trustee shall
deliver to the NIMs Insurer upon written request: (i) a copy of such USAP
Report, and (ii) the Servicer's annual officer's certificate as to compliance
with this Agreement provided by the Servicer to the Trustee pursuant to Section
3.17. In addition, at the NIMs Insurer's written request, the Servicer shall
deliver copies of evidence of the Servicer's fidelity bond or errors and
omissions insurance coverage to the NIMs Insurer.

         SECTION 3.19. Rights of the NIMs Insurer. Each of the rights of the
NIMs Insurer set forth in this agreement shall exist so long as the notes issued
pursuant to the Indenture remain outstanding or the NIMs Insurer is owed amounts
in respect of its guarantee of payment on such notes.

         SECTION 3.20. Periodic Filings.

         (a) Promptly upon receipt of any report of the independent public
accountants required pursuant to Section 3.18, the Trustee shall review such
report. As part of the Form 10-K required to be filed pursuant to the terms of
this Agreement, the Trustee shall include such accountants report as well as the
Officer's Certificate delivered by the Servicer pursuant to Section 3.17
relating to the Servicer's performance of its obligations under this Agreement
and any significant deficiencies relating to the Servicer's compliance set forth
in the report of the Servicer's certified independent accountants described
above.

         (b) The Depositor shall prepare and file the initial report on Form
8-K. The Trustee shall prepare for filing, and execute (other than the Form
10-Ks and the Certification), on behalf of the Trust

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Fund, and file with the Securities and Exchange Commission, (i) within 15 days
after each Distribution Date in each month, each Monthly Statement on Form 8-K
under the Exchange Act executed by the Trustee, (ii) on or before March 31 of
each year beginning in 2005 or such other date in order to remain in compliance
with the Section 302 Requirements, a Form 10-K under the Exchange Act executed
by the Depositor, including any certification (the "Certification") required by
the Section 302 Requirements, and (iii) any and all reports, statements and
information respecting the Trust Fund and/or the Certificates required to be
filed on behalf of the Trust Fund under the Exchange Act executed by the
Trustee. The Certification shall be executed by a senior officer of the
Depositor. Upon such filing with the Securities and Exchange Commission, the
Trustee shall promptly deliver to the Depositor a copy of any such executed
report, statement or information. Prior to making any such filings and
certifications, the Trustee shall comply with the provisions set forth in this
Section. If permitted by applicable law and unless the Depositor otherwise
directs, the Trustee shall file a Form 15 under the Exchange Act as soon as it
is able to do so. The Depositor hereby grants to the Trustee a limited power of
attorney to execute (other than the Form 10-Ks and the Certification) and file
each such document on behalf of the Depositor. Such power of attorney shall
continue until either the earlier of (i) receipt by the Trustee from the
Depositor of written termination of such power of attorney and (ii) the
termination of the Trust Fund. The Depositor agrees to promptly furnish to the
Trustee, from time to time upon request, such further information, reports, and
financial statements within its control related to this Agreement and the
Mortgage Loans as the Trustee reasonably deems appropriate to prepare and file
all necessary reports with the Commission. The Trustee shall have no
responsibility to file any items other than those specified in this Section.

         (c) [Reserved].

         (d) The obligations set forth in paragraphs (a) through (c) of this
Section shall only apply with respect to periods for which the Trustee is
obligated to file Form 8-Ks and 10-Ks pursuant to paragraph (b) of this Section.
In the event a Form 15 is properly filed pursuant to paragraph (b) of this
Section, there shall be no further obligations under paragraphs (a) through (c)
of this Section commencing with the fiscal year in which the Form 15 is filed
(other than the obligations in paragraphs (a) and (b) of this Section to be
performed in such fiscal year that relate back to the prior fiscal year).

         SECTION 3.21. Annual Certificate by Trustee

         (a) Within 15 days prior to the date on which a Form 10-K is to be
filed with a Certification by the Depositor, an officer of the Trustee shall
execute and deliver an Officer's Certificate, signed by the senior officer in
charge of the Trustee or any officer to whom that officer reports, to the
Depositor for the benefit of such Depositor and its officers, directors and
affiliates, certifying as to the matters described in the Officer's Certificate
attached hereto as Exhibit K.

         (b) The Trustee shall indemnify and hold harmless the Depositor and its
officers, directors, agents and affiliates from and against any losses, damages,
penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments and other costs and expenses arising out of or based upon a breach by
the Trustee or any of its officers, directors, agents or affiliates of its
obligations under this Section 3.21, any material misstatement or omission in
the Officer's Certificate required under this Section or the negligence, bad
faith or willful misconduct of the Trustee in connection therewith. If the
indemnification provided for herein is unavailable or insufficient to hold
harmless the Depositor, then the Trustee agrees that it shall contribute to the
amount paid or payable by the Depositor as a result of the losses, claims,
damages or liabilities of the Depositor in such proportion as is appropriate to
reflect the relative fault of the Trustee on the one had and the Depositor on
the other in connection with a breach of the Trustee's obligations under this
Section 3.21, any material misstatement or omission in the Officer's Certificate
required under this Section or the Trustee's negligence, bad faith or willful
misconduct in connection therewith.

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         SECTION 3.22. Annual Certificate by Servicer

         (a) Within 15 days prior to the date on which a Form 10-K is required
to be filed with a Certification by the Depositor, the Servicer shall execute
and deliver an Officer's Certificate in the form of Exhibit L attached hereto,
signed by the senior officer in charge of servicing of the Servicer or any
officer to whom that officer reports, to the Trustee and Depositor for the
benefit of the Trustee and Depositor and their respective officers, directors
and affiliates, certifying as to the following matters:

                  (i) The Servicer has reviewed the information required to be
         delivered to the Trustee pursuant to the Pooling and Servicing
         Agreement (the "Servicing Information").

                  (ii) Based on the Servicer's knowledge, the information in the
         Annual Statement of Compliance and the Servicing Information does not
         contain any untrue statement of a material fact or omit to state a
         material fact necessary to make the statements made therein, in light
         of the circumstances under which such statements were made, not
         misleading as of the last day of the period covered by the Annual
         Statement of Compliance;

                  (iii) Based on the Servicer's knowledge, the Servicing
         Information required to be provided to the Trustee by the Servicer
         under this Agreement has been provided to the Trustee; and

                  (iv) Based upon the review required under this Agreement, and
         except as disclosed in the Annual Statement of Compliance, the Annual
         Independent Certified Public Accountant's Servicing Report and all
         servicing reports, officer's certificates and other information
         relating to the servicing of the Mortgage Loans submitted to the
         Trustee by the Servicer, the Servicer has, as of the last day of the
         period covered by the Annual Statement of Compliance fulfilled its
         obligations under this Agreement.

         (b) The Servicer shall indemnify and hold harmless the Depositor and
its officers, directors, agents and affiliates from and against (i) any losses,
damages, penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments and other costs and expenses arising out of or based upon a breach by
the Servicer or any of its officers, directors, agents or affiliates of its
obligations under this Section 3.22, (ii) any allegation that the Officer's
Certificate required under this Section contains a misstatement of a material
fact or omits or omitted to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading or (iii) the negligence, bad faith or willful misconduct of
the Servicer in connection therewith. If the indemnification provided for herein
is unavailable or insufficient to hold harmless the Depositor, then the Servicer
agrees that it shall contribute to the amount paid or payable by the Trustee and
the Depositor as a result of the losses, claims, damages or liabilities of the
Depositor in such proportion as is appropriate to reflect the relative fault of
the Depositor on the one hand and the Servicer on the other in connection with a
breach of the Servicer's obligations under this Section 3.22, any alleged
material misstatement or omission in the Officer's Certificate required under
this Section or the Servicer's negligence, bad faith or willful misconduct in
connection therewith.

         SECTION 3.23. Prepayment Penalty Reporting Requirements

         (a) Promptly after each Distribution Date, the Servicer shall provide
to the Trustee the following information with regard to each Mortgage Loan that
has prepaid during the related Prepayment Period:

         (i) loan number;

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         (ii) current Mortgage Rate;

         (iii) current principal balance;

         (iv) original principal balance;

         (v) prepayment penalty amount due;

         (vi) prepayment penalty amount collected; and

         (vii) reason why full prepayment penalty amount was not collected, if
applicable.

         SECTION 3.24. Statements to Trustee

         (a) Not later than the tenth calendar day of each month, the Servicer
shall furnish to the Trustee and the NIMs Insurer an electronic file providing
loan level accounting data for the period ending on the last Business Day of the
preceding month in the format mutually agreed upon between the Servicer and the
Trustee, including but not limited to information sufficient to allow the
Trustee to prepare the Monthly Statement described in Section 4.05(a).

         SECTION 3.25. Indemnification

         (a) The Servicer shall indemnify the Seller, the Trust Fund, the
Trustee, the Depositor and the NIMs Insurer and hold each of them harmless
against any and all claims, losses, damages, penalties, fines, forfeitures,
reasonable and necessary legal fees and related costs, judgments, and any other
costs, fees and expenses that any of such parties may sustain in any way related
to the failure of the Servicer to perform its duties and service the Mortgage
Loans in compliance with the terms of this Agreement. The Servicer immediately
shall notify the Seller, the Trustee, the Depositor and the NIMs Insurer or any
other relevant party if a claim is made by a third party with respect to this
Agreement or the Mortgage Loans, assume (with the prior written consent of the
indemnified party, which consent shall not be unreasonably withheld or delayed)
the defense of any such claim and pay all expenses in connection therewith,
including counsel fees, and promptly pay, discharge and satisfy any judgment or
decree which may be entered against it or any of such parties in respect of such
claim. The Servicer shall follow any written instructions received from the
Trustee and the NIMs Insurer in connection with such claim. The Servicer shall
provide the Trustee, the Depositor and the NIMs Insurer with a written report of
all expenses and advances incurred by the Servicer pursuant to this Section
3.25, and the Servicer from the assets of the Trust Fund in the Collection
Account promptly shall reimburse itself for all amounts advanced by it pursuant
to the preceding sentence except when the claim in any way relates to the
failure of the Servicer to service and administer the Mortgage Loans in material
compliance with the terms of this Agreement or the gross negligence, bad faith
or willful misconduct of the Servicer. The provisions of this paragraph shall
survive the termination of this Agreement and the payment of the outstanding
Certificates.

         SECTION 3.26. Nonsolicitation

         (a) For as long as the Servicer services the Mortgage Loans, the
Servicer covenants that it will not, and that it will ensure that its affiliates
and agents, will not, directly solicit or provide information for any other
party to solicit for prepayment or refinancing of any of the Mortgage Loans by
the related Mortgagors. It is understood that the promotions undertaken by the
Servicer which are directed to the general public at large, or certain segments
thereof, shall not constitute solicitation as that term is used in this Section
3.26.

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                                   ARTICLE IV

                                  DISTRIBUTIONS

         SECTION 4.01. Advances.

         Subject to the conditions of this Article IV, the Servicer, as required
below, shall make an Advance and deposit such Advance in the Collection Account.
Each such Advance shall be remitted to the Collection Account no later than 1:00
p.m. Eastern Time on the Servicer Remittance Date in immediately available
funds. The Servicer shall be obligated to make any such Advance only to the
extent that such advance would not be a Non-Recoverable Advance. If the Servicer
shall have determined that it has made a Non-Recoverable Advance or that a
proposed Advance or a lesser portion of such Advance would constitute a
Non-Recoverable Advance, the Servicer shall deliver (i) to the Trustee for the
benefit of the Certificateholders funds constituting the remaining portion of
such Advance, if applicable, and (ii) to the Depositor, the NIMs Insurer, each
Rating Agency and the Trustee an Officer's Certificate setting forth the basis
for such determination. The Servicer may, in its sole discretion, make an
Advance with respect to the principal portion of the final Scheduled Payment on
a Balloon Loan, but the Servicer is under no obligation to do so; provided,
however, that nothing in this sentence shall affect the Servicer's obligation
under this Section 4.01 to advance the interest portion of the final Scheduled
Payment with respect to a Balloon Loan as if such Balloon Loan were a fully
amortizing Mortgage Loan. If a Mortgagor does not pay its final Scheduled
Payment on a Balloon Loan when due, the Servicer shall Advance (unless it
determines in its good faith judgment that such amounts would constitute a
Non-Recoverable Advance) a full month of interest (net of the Servicing Fee) on
the Stated Principal Balance thereof each month until its Stated Principal
Balance is reduced to zero.

         In lieu of making all or a portion of such Advance from its own funds,
the Servicer may (i) cause to be made an appropriate entry in its records
relating to the Collection Account that any amount held for future distribution
has been used by the Servicer in discharge of its obligation to make any such
Advance and (ii) transfer such funds from the Collection Account to the
Certificate Account. In addition, the Servicer shall have the right to reimburse
itself for any such Advance from amounts held from time to time in the
Collection Account to the extent such amounts are not then required to be
distributed. Any funds so applied and transferred pursuant to the previous two
sentences shall be replaced by the Servicer by deposit in the Collection Account
no later than the close of business on the Servicer Remittance Date on which
such funds are required to be distributed pursuant to this Agreement. The
Servicer shall be entitled to be reimbursed from the Collection Account for all
Advances of its own funds made pursuant to this Section as provided in Section
3.08. The obligation to make Advances with respect to any Mortgage Loan shall
continue until such Mortgage Loan is paid in full or the related Mortgaged
Property (or stock allocated to a dwelling unit, in the case of Co-op Loan) or
related REO Property has been liquidated or until the purchase or repurchase
thereof (or substitution therefor) from the Trust Fund pursuant to any
applicable provision of this Agreement, except as otherwise provided in this
Section 4.01.

         SECTION 4.02. Reduction of Servicing Compensation in Connection with
Prepayment Interest Shortfalls.

         In the event that any Mortgage Loan is the subject of a Prepayment
Interest Shortfall resulting from a Principal Prepayment in full, the Servicer
shall, from amounts in respect of the Servicing Fee for such Distribution Date,
deposit into the Collection Account, as a reduction of the Servicing Fee for
such Distribution Date, no later than the Servicer Remittance Date immediately
preceding such Distribution Date, an amount up to the Prepayment Interest
Shortfall; provided that the amount so deposited with respect to any
Distribution Date shall be limited to the product of (x) one-twelfth of 0.25%
and (y) the aggregate Stated Principal Balance of the Mortgage Loans. In case of
such deposit, the Servicer shall not

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be entitled to any recovery or reimbursement from the Depositor, the Trustee,
the Trust Fund or the Certificateholders. With respect to any Distribution Date,
to the extent that the Prepayment Interest Shortfall exceeds Compensating
Interest (such excess, a "Non-Supported Interest Shortfall"), such Non-Supported
Interest Shortfall shall reduce the Current Interest with respect to each Class
of Certificates, pro rata, based upon the amount of interest each such Class
would otherwise be entitled to receive on such Distribution Date.
Notwithstanding the foregoing, there shall be no reduction of the Servicing Fee
in connection with Prepayment Interest Shortfalls relating to the Relief Act and
the Servicer shall not be obligated to pay Compensating Interest with respect to
Prepayment Interest Shortfalls related to the Relief Act.

         SECTION 4.03. Distributions on the REMIC Interests.

         On each Distribution Date, amounts on deposit in the Certificate
Account shall be treated for federal income tax purposes as applied to
distributions on the interests in the Lower Tier REMIC, the Middle Tier REMIC,
the B1 REMIC, the B2 REMIC, the B3 REMIC and the C REMIC in an amount sufficient
to make the distributions on the respective Certificates on such Distribution
Date in accordance with the provisions of Section 4.04.

         SECTION 4.04. Distributions.

         (a) [Reserved].

         (b) On each Distribution Date, the Trustee shall make the following
distributions from funds then available in the Certificate Account, of an amount
equal to the Interest Funds in the following order of priority:

                  (i) to the Class P Certificates, an amount equal to any
         prepayment penalties received with respect to the Mortgage Loans and
         all amounts paid by the Servicer, the Seller or any Transferor in
         respect of prepayment penalties pursuant to this Agreement or the
         Transfer Agreements, as applicable, and all amounts received in respect
         of any indemnification paid as a result of a prepayment penalty being
         unenforceable in breach of the representations and warranties set forth
         in the Sale Agreement or the Transfer Agreements, in each case during
         the related Prepayment Period;

                  (ii) to each Class of the Class R, Class A-1, Class A-2 and
         Class S Certificates, the Current Interest and any Interest Carry
         Forward Amount with respect to such Class; provided, however, if such
         amount is not sufficient to make a full distribution of the Current
         Interest and any Interest Carry Forward Amount with respect to all of
         the Class R, Class A-1, Class A-2 and Class S Certificates, such amount
         will be distributed pro rata among each Class of the Class R, Class
         A-1, Class A-2 and Class S Certificates based on the ratio of (x) the
         Current Interest and Interest Carry Forward Amount for such Class to
         (y) the total amount of Current Interest and any Interest Carry Forward
         Amount for the Class R, Class A-1, Class A-2 and Class S Certificates;

                  (iii) to the Class M-1 Certificates, the Class M-1 Current
         Interest and any Class M-1 Interest Carry Forward Amount;

                  (iv) to the Class M-2 Certificates, the Class M-2 Current
         Interest and any Class M-2 Interest Carry Forward Amount;

                  (v) to the Class B-1 Certificates, the Class B-1 Current
         Interest and any Class B-1 Interest Carry Forward Amount;

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                  (vi) to the Class B-2 Certificates, the Class B-2 Current
         Interest and any Class B-2 Interest Carry Forward Amount;

                  (vii) to the Class B-3 Certificates, the Class B-3 Current
         Interest and any Class B-3 Interest Carry Forward Amount; and

                  (viii) any remainder pursuant to Section 4.04(e) hereof.

         On each Distribution Date, subject to the proviso in (ii) above,
Interest Funds received on the Group A Mortgage Loans will be deemed to be
distributed to the Class R and Class A-1 Certificates and Interest Funds
received on the Group B Mortgage Loans will be deemed to be distributed to the
Class A-2 Certificates, in each case, until the related Current Interest and
Interest Carry Forward Amount of each such class of Certificates for such
Distribution Date has been paid in full. Thereafter, Interest Funds not required
for such distributions are available to be applied to the Class S Certificates
and, if necessary, to the class or classes of Certificates that are not related
to such group of Mortgage Loans.

         (c) [Reserved].

         (d) On each Distribution Date, the Trustee shall make the following
distributions from the Certificate Account of an amount equal to the Principal
Distribution Amount in the following order of priority, and each such
distribution shall be made only after all distributions pursuant to Section
4.04(b) above shall have been made until such amount shall have been fully
distributed for such Distribution Date:

                  (i) with respect to the Class A Certificates, the Class A
         Principal Distribution Amount will be distributed as follows:

                  the Group A Principal Distribution Amount will be distributed
                  sequentially to the Class R and Class A-1 Certificates and the
                  Group B Principal Distribution Amount will be distributed to
                  the Class A-2 Certificates until the respective Certificate
                  Principal Balances thereof have been reduced to zero;

                  (ii) to the Class M-1 Certificates, the Class M-1 Principal
         Distribution Amount;

                  (iii) to the Class M-2 Certificates, the Class M-2 Principal
         Distribution Amount;

                  (iv) to the Class B-1 Certificates, the Class B-1 Principal
         Distribution Amount;

                  (v) to the Class B-2 Certificates, the Class B-2 Principal
         Distribution Amount;

                  (vi) to the Class B-3 Certificates, the Class B-3 Principal
         Distribution Amount; and

                  (vii) any remainder pursuant to Section 4.04(e) hereof.

         (e) On each Distribution Date, the Trustee shall make the following
distributions from funds available from the Certificate Account up to the
following amounts, of the remainders pursuant to Section 4.04(b)(viii) and
(d)(vii) hereof and, to the extent required to make the distributions set forth
below in clauses (i) through (vii) of this Section 4.04(e), and each such
distribution shall be made only after all distributions pursuant to Sections
4.04(b) and (d) above shall have been made until such remainders shall have been
fully distributed for such Distribution Date:

                  (i) for distribution as part of the Principal Distribution
         Amount, the Extra Principal Distribution Amount;

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                  (ii) to the Class M-1 Certificates, the Class M-1 Unpaid
         Realized Loss Amount;

                  (iii) to the Class M-2 Certificates, the Class M-2 Unpaid
         Realized Loss Amount;

                  (iv) to the Class B-1 Certificates, the Class B-1 Unpaid
         Realized Loss Amount;

                  (v) to the Class B-2 Certificates, the Class B-2 Unpaid
         Realized Loss Amount;

                  (vi) to the Class B-3 Certificates, the Class B-3 Unpaid
         Realized Loss Amount;

                  (vii) to the Class A, Class M and Class B Certificates, on a
         pro rata basis, based upon outstanding Floating Rate Certificate
         Carryover, the Floating Rate Certificate Carryover for each such Class;
         and

                  (viii) the remainder pursuant to Section 4.04(f) hereof.

         (f) on each Distribution Date, the Trustee shall allocate the remainder
pursuant to Section 4.04(e)(viii) as follows:

                  (i) to the Class C Certificates in the following order of
         priority, (I) the Class C Current Interest, (II) the Class C Interest
         Carry Forward Amount, (III) as principal on the Class C Certificate
         until the Certificate Principal Balance of the Class C Certificates has
         been reduced to zero and (IV) the Class C Unpaid Realized Loss Amount;
         and

                  (ii) the remainder pursuant to Section 4.04(g) hereof.

         (g) On each Distribution Date, the Trustee shall allocate the remainder
pursuant to Section 4.04(f)(ii) hereof, (i) to the Trustee to reimburse amounts
or pay indemnification amounts owing to the Trustee from the Trust Fund pursuant
to Section 8.05 to the extent such amounts shall have exceeded the cap set forth
in Section 8.06(c), and (ii) thereafter, to the Class R Certificate and such
distributions shall be made only after all preceding distributions shall have
been made until such remainder shall have been fully distributed.

         (h) On each Distribution Date, after giving effect to distributions on
such Distribution Date, the Trustee shall allocate the Applied Realized Loss
Amount for the Certificates to reduce the Certificate Principal Balances of the
Class C and Subordinated Certificates in the following order of priority:

                  (i) to the Class C Certificates until the Class C Certificate
         Principal Balance is reduced to zero;

                  (ii) to the Class B-3 Certificates until the Class B-3
         Certificate Principal Balance is reduced to zero;

                  (iii) to the Class B-2 Certificates until the Class B-2
         Certificate Principal Balance is reduced to zero;

                  (iv) to the Class B-1 Certificates until the Class B-1
         Certificate Principal Balance is reduced to zero;

                  (v) to the Class M-2 Certificates until the Class M-2
         Certificate Principal Balance is reduced to zero; and

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                  (vi) to the Class M-1 Certificates until the Class M-1
         Certificate Principal Balance is reduced to zero.

         (i) Subject to Section 9.02 hereof respecting the final distribution,
on each Distribution Date the Trustee shall make distributions to each
Certificateholder of record on the preceding Record Date either by wire transfer
in immediately available funds to the account of such holder at a bank or other
entity having appropriate facilities therefor, if such Holder has so notified
the Trustee at least five (5) Business Days prior to the related Record Date or,
if not, by check mailed by first class mail to such Certificateholder at the
address of such holder appearing in the Certificate Register. Notwithstanding
the foregoing, but subject to Section 9.02 hereof respecting the final
distribution, distributions with respect to Certificates registered in the name
of a Depository shall be made to such Depository in immediately available funds.

         (j) The Trustee is hereby directed by the Depositor to execute the Cap
Contract on behalf of the Trust Fund in the form presented to it by the
Depositor and shall have no responsibility for the contents, adequacy or
sufficiency of such Cap Contract, including, without limitation, the
representations and warranties contained therein. Any funds payable by the
Trustee under the Cap Contract at closing shall be paid by the Depositor.
Notwithstanding anything to the contrary contained herein or in the Cap
Contract, the Trustee shall not be required to make any payments to the
counterparty under the Cap Contract. Any payments received under the terms of
the Cap Contract will be available to pay the holders of the Offered
Certificates (other than the Class S Certificates) and Class B Certificates up
to the amount of any Floating Rate Certificate Carryover remaining after the
application of Section 4.04(e)(vii) on such Distribution Date; provided,
however, that payments received on the Cap Contract will not be used to pay any
Floating Rate Certificate Carryover that results from a failure to allocate
Applied Realized Loss Amounts to the Class A Certificates. Any amounts in the
Cap Contract Account on any Distribution Date in excess of amounts required,
subject to the restrictions set forth in the preceding sentence, to pay
outstanding Floating Rate Certificate Carryovers on such Distribution Date will
be distributed to the holders of the Class C Certificates. Payments from the Cap
Contract Account in respect of the Floating Rate Certificate Carryovers shall,
subject to the limitations set forth in the second preceding sentence of this
Section 4.04(j), be paid to the Offered Certificates (other than the Class S
Certificates) and Class B Certificates in accordance with the provisions of
Section 4.04(e)(vii) hereof.

For any Distribution Date on which there is a payment under the Cap Contract
based on a notional balance in excess of the aggregate Certificate Principal
Balance of the Offered Certificates and Class B Certificates, the amount
representing such excess payment, to the extent not otherwise used to pay
Floating Rate Certificate Carryovers, shall not be an asset of the Trust Fund
and, instead, shall be paid into and distributed out of a separate trust created
by this Agreement for the benefit of the Class C Certificates and shall be
distributed to the Class C Certificates.

                  (i) On or prior to the Cap Contract Termination Date, amounts,
         if any, received by the Trustee for the benefit of the Trust Fund in
         respect of the Cap Contract shall be deposited by the Trustee into the
         Cap Contract Account. With respect to any Distribution Date on or prior
         to the Cap Contract Termination Date, the amount, if any, payable by
         the Cap Contract Counterparty under the Cap Contract will equal the
         product of (i) the excess of (x) One-Month LIBOR (as determined by the
         Cap Contract Counterparty and subject to a cap equal to the rate with
         respect to such Distribution Date as shown under the heading "1ML
         Strike Upper Collar" in the Cap Table), over (y) the rate with respect
         to such Distribution Date as shown under the heading "1ML Strike Lower
         Collar" in the Cap Table, (ii) an amount equal to the Cap Contract
         Notional Balance and (iii) the number of days in such Accrual Period,
         divided by 360.

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                  (ii) Amounts on deposit in the Cap Contract Account will
         remain uninvested pending distribution to Certificateholders.

                  (iii) The Cap Contracts is scheduled to remain in effect until
         the Cap Contract Termination Date and will be subject to early
         termination only in limited circumstances. Such circumstances include
         certain insolvency or bankruptcy events in relation to the Cap Contract
         Counterparty (after a grace period of three Local Business Days, as
         defined in the Cap Contract, after notice of such failure is received
         by the Cap Contract Counterparty) to make a payment due under the Cap
         Contract, the failure by the Cap Contract Counterparty or the Trustee
         (after a cure period of 20 days after notice of such failure is
         received) to perform any other agreement made by it under the Cap
         Contract, the termination of the Trust Fund and the Cap Contract
         becoming illegal or subject to certain kinds of taxation.

         (k) In accordance with this Agreement, the Servicer shall prepare and
deliver a report (the "Remittance Report") to the Trustee and the NIMs Insurer
in the form of a computer readable magnetic tape (or by such other means as the
Servicer, the Trustee and the NIMs Insurer may agree from time to time)
containing such data and information as to permit the Trustee to prepare the
Monthly Statement to Certificateholders and make the required distributions for
the related Distribution Date.

         (l) The Trustee shall promptly notify the NIMs Insurer of any
proceeding or the institution of any action, of which a Responsible Officer of
the Trustee has actual knowledge, seeking the avoidance as a preferential
transfer under applicable bankruptcy, insolvency, receivership or similar law (a
"Preference Claim") of any distribution made with respect to the Class C
Certificates or the Class P Certificates. Each Holder of the Class C
Certificates or the Class P Certificates, by its purchase of such Certificates
and the Trustee hereby agree that the NIMs Insurer may at any time during the
continuation of any proceeding relating to a Preference Claim direct all matters
relating to such Preference Claim, including, without limitation, (i) the
direction of any appeal of any order relating to such Preference Claim and (ii)
the posting of any surety, supersedes or performance bond pending any such
appeal. In addition and without limitation of the foregoing, the NIMs Insurer
shall be subrogated to the rights of the Trustee and each Holder of the Class C
Certificates and the Class P Certificates in the conduct of any such Preference
Claim, including, without limitation, all rights of any party to an adversary
proceeding or action with respect to any court order issued in connection with
any such Preference Claim; provided, however, that the NIMs Insurer will not
have any rights with respect to any Preference Claim set forth in this paragraph
unless the indenture trustee with respect to the NIM Notes or the holder of any
NIM Notes has been required to relinquish a distribution made on the Class C
Certificates, the Class P Certificates or the NIM Notes, as applicable, and the
NIMs Insurer has made a payment in respect of such relinquished amount.

         SECTION 4.05. Monthly Statements to Certificateholders.

         (a) Not later than each Distribution Date based on information provided
by the Servicer (which information is not required to include any prediction of
future performance as to which such report relates), the Trustee shall prepare
and make available on its website located at www.ctslink.com to each Holder of a
Class of Certificates of the Trust Fund, the Servicer, the NIMs Insurer, the
Rating Agencies and the Depositor a statement setting forth for the
Certificates:

                  (i) the amount of the related distribution to Holders of each
         Class allocable to principal, separately identifying (A) the aggregate
         amount of any Principal Prepayments included therein, (B) the aggregate
         of all scheduled payments of principal included therein, (C) the Extra
         Principal Distribution Amount, if any, and (D) the aggregate amount of
         prepayment penalties, if any;

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<PAGE>

                  (ii) the amount of such distribution to Holders of each Class
         allocable to interest, together with any Non-Supported Interest
         Shortfalls allocated to each Class;

                  (iii) the Class Certificate Principal Balance of each Class
         after giving effect (i) to all distributions allocable to principal on
         such Distribution Date and (ii) the allocation of any Applied Realized
         Loss Amounts for such Distribution Date;

                  (iv) the Pool Stated Principal Balance for such Distribution
         Date;

                  (v) the related amount of the Servicing Fee paid to or
         retained by the Servicer;

                  (vi) the Pass-Through Rate for each Class of Certificates for
         such Distribution Date;

                  (vii) the amount of Advances included in the distribution on
         such Distribution Date;

                  (viii) the cumulative amount of (A) Realized Losses and (B)
         Applied Realized Loss Amounts to date, in the aggregate and with
         respect to the Mortgage Loans;

                  (ix) the amount of (A) Realized Losses and (B) Applied
         Realized Loss Amounts with respect to such Distribution Date, in the
         aggregate and with respect to the Mortgage Loans;

                  (x) the number and aggregate principal amounts of Mortgage
         Loans (A) Delinquent (exclusive of Mortgage Loans in foreclosure) (1)
         31 to 60 days, (2) 61 to 90 days and (3) 91 or more days, and (B) in
         foreclosure and Delinquent (1) 31 to 60 days, (2) 61 to 90 days and (3)
         91 or more days, in each case as of the close of business on the last
         day of the calendar month preceding such Distribution Date, in the
         aggregate and with respect to the Mortgage Loans;

                  (xi) with respect to any Mortgage Loan that became an REO
         Property during the preceding calendar month, the loan number and
         Stated Principal Balance of such Mortgage Loan as of the close of
         business on the last day of the calendar month preceding such
         Distribution Date and the date of acquisition thereof, in the aggregate
         and with respect to the Mortgage Loans;

                  (xii) the total number and principal balance of any REO
         Properties as of the close of business on the last day of the calendar
         month preceding such Distribution Date, in the aggregate and with
         respect to the Mortgage Loans;

                  (xiii) the aggregate Stated Principal Balance of all
         Liquidated Loans as of the preceding Distribution Date, in the
         aggregate and with respect to the Mortgage Loans;

                  (xiv) whether a Trigger Event has occurred;

                  (xv) with respect to each Class of Certificates, any Interest
         Carry Forward Amount with respect to such Distribution Date for each
         such Class, any Interest Carry Forward Amount paid for each such Class
         and any remaining Interest Carry Forward Amount for each such Class;

                  (xvi) the number and Stated Principal Balance (as of the
         preceding Distribution Date) of any Mortgage Loans which were purchased
         or repurchased during the preceding Due Period and since the Cut-off
         Date;

                  (xvii) the number of Mortgage Loans for which prepayment
         penalties were received during the related Prepayment Period and, for
         each such Mortgage Loan, the amount of prepayment penalties received
         during the related Prepayment Period and in the aggregate of such
         amounts for all such Mortgage Loans since the Cut-off Date;

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<PAGE>

                  (xviii) the amount and purpose of any withdrawal from the
         Collection Account pursuant to Section 3.08(a)(iv);

                  (xix) the amount of any payments to each Class of Certificates
         that are treated as payments received in respect of a REMIC Regular
         Interest and the amount of any payments to each Class of Certificates
         that are not treated as payments received in respect of a REMIC Regular
         Interest; and

                  (xx) as of each Distribution Date, the amount, if any, to be
         deposited in the Cap Contract Account pursuant to the Cap Contract as
         described in Section 4.04(j) and the amount thereof to be paid to the
         Offered Certificates and Class B Certificates described in Section
         4.04(j) hereof.

         The Trustee will make the Monthly Statement (and, at its option, any
additional files containing the same information in an alternative format)
available each month to Certificateholders, other parties to this Agreement and
any other interested parties via the Trustee's Internet website. The Trustee's
Internet website shall initially be located at "www.ctslink.com". Assistance in
using the website can be obtained by calling the Trustee's customer service desk
at (301) 815-6600. Parties that are unable to use the website are entitled to
have a paper copy mailed to them via first class mail by calling the customer
service desk and indicating such. The Trustee shall have the right to change the
way the monthly statements to Certificateholders are distributed in order to
make such distribution more convenient and/or more accessible to the above
parties and the Trustee shall provide timely and adequate notification to all
above parties regarding any such changes.

         The Trustee shall also be entitled to rely on but shall not be
responsible for the content or accuracy of any information provided by third
parties for purposes of preparing the monthly statement and may affix thereto
any disclaimer it deems appropriate in its reasonable discretion (without
suggesting liability on the part of any other party hereto).

         As a condition to access the Trustee's internet website, the Trustee
may require registration and the acceptance of a disclaimer. The Trustee will
not be liable for the dissemination of information in accordance with this
Agreement.

         (b) The Servicer shall deliver to the NIMs Insurer a copy of any report
delivered by the Servicer to the Trustee.

         (c) Within a reasonable period of time after the end of each calendar
year, the Trustee shall cause to be furnished to each Person who at any time
during the calendar year was a Certificateholder, a statement containing the
information set forth in clauses (a)(i) without regard to subclauses (A) - (D)
thereof and (a)(ii) of this Section 4.05 aggregated for such calendar year or
applicable portion thereof during which such Person was a Certificateholder.
Such obligation of the Trustee shall be deemed to have been satisfied to the
extent that substantially comparable information shall be provided by the
Trustee pursuant to any requirements of the Code as from time to time in effect.

         (d) Upon filing with the Internal Revenue Service, the Trustee shall
furnish to the Holders of the Class R Certificate and Class R-X Certificate and
the NIMs Insurer each Form 1066 and each Form 1066Q and shall respond promptly
to written requests made not more frequently than quarterly by any Holder of
Class R Certificate or Class R-X Certificate with respect to the following
matters:

                  (i) The original projected principal and interest cash flows
         on the Closing Date on each Class of regular and residual interests
         created hereunder and on the Mortgage Loans, based on the Prepayment
         Assumption;

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<PAGE>

                  (ii) The projected remaining principal and interest cash flows
         as of the end of any calendar quarter with respect to each Class of
         regular and residual interests created hereunder and the Mortgage
         Loans, based on the Prepayment Assumption;

                  (iii) The Prepayment Assumption and any interest rate
         assumptions used in determining the projected principal and interest
         cash flows described above;

                  (iv) The original issue discount (or, in the case of the
         Mortgage Loans, market discount) or premium accrued or amortized
         through the end of such calendar quarter with respect to each Class of
         regular or residual interests created hereunder and to the Mortgage
         Loans, together with each constant yield to maturity used in computing
         the same;

                  (v) The treatment of losses realized with respect to the
         Mortgage Loans or the regular interests created hereunder, including
         the timing and amount of any cancellation of indebtedness income of the
         REMICs with respect to such regular interests or bad debt deductions
         claimed with respect to the Mortgage Loans;

                  (vi) The amount and timing of any non-interest expenses of the
         REMICs; and

                  (vii) Any taxes (including penalties and interest) imposed on
         the REMICs, including, without limitation, taxes on "prohibited
         transactions," "contributions" or "net income from foreclosure
         property" or state or local income or franchise taxes.

         The information pursuant to clauses (i), (ii), (iii) and (iv) above
shall be provided by the Depositor pursuant to Section 8.12.

                                   ARTICLE V
                                THE CERTIFICATES

         SECTION 5.01. The Certificates.

         The Certificates shall be substantially in the forms attached hereto as
exhibits. The Certificates shall be issuable in registered form, in the minimum
dollar denominations, integral dollar multiples in excess thereof (except that
one Certificate of each Class may be issued in a different amount which must be
in excess of the applicable minimum dollar denomination) and aggregate dollar
denominations as set forth in the following table:

<TABLE>
<CAPTION>
                                                                             Original Certificate
                            Minimum              Integral Multiples in       Principal Balance or
Class                     Denomination             Excess of Minimum           Notional Balance
-----                     ------------             -----------------           ----------------
<S>                      <C>                     <C>                         <C>
A-1                      $   25,000.00                      $1.00                $155,745,000.00
A-2                      $   25,000.00                      $1.00                 100,902,000.00
S                        $1,000,000.00                      $1.00                $300,186,100.00
M-1                      $   25,000.00                      $1.00                $ 22,151,000.00
M-2                      $   25,000.00                      $1.00                $ 10,694,000.00
B-1                      $   25,000.00                      $1.00                $  3,819,000.00
B-2                      $   25,000.00                      $1.00                $  4,583,000.00
B-3                      $   25,000.00                      $1.00                $  2,292,000.00
C                                   (1)                        (1)                           100%
R                        $      100.00                        N/A                $        100.00
R-X                                 (2)                        (2)                            (2)
</TABLE>

                                       84
<PAGE>

<TABLE>
<CAPTION>
                                                                             Original Certificate
                            Minimum              Integral Multiples in       Principal Balance or
Class                     Denomination             Excess of Minimum           Notional Balance
-----                     ------------             -----------------           ----------------
<S>                      <C>                     <C>                         <C>
  P                            (3)                        (3)                         (3)
</TABLE>

-------------------
(1)      The Class C Certificates shall not have minimum dollar denominations or
         certificate notional balances and shall be issued in a minimum
         percentage interest of 25%. The initial Overcollateralization Amount is
         $5,346,592.44.

(2)      The Class R-X Certificates shall not have minimum dollar denominations
         or Certificate Principal Balances and shall be issued in a minimum
         percentage interest of 100%.

(3)      The Class P Certificates shall not have minimum dollar denominations or
         Certificate Principal Balances and shall be issued in a minimum
         percentage interest of 25%.

         The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by an authorized officer. Certificates bearing the manual
or facsimile signatures of individuals who were, at the time when such
signatures were affixed, authorized to sign on behalf of the Trustee shall bind
the Trust Fund, notwithstanding that such individuals or any of them have ceased
to be so authorized prior to the authentication and delivery of such
Certificates or did not hold such offices at the date of such authentication and
delivery. No Certificate shall be entitled to any benefit under this Agreement,
or be valid for any purpose, unless there appears on such Certificate a
certificate of authentication substantially in the form set forth as attached
hereto executed by the Trustee by manual signature, and such certificate of
authentication upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication. On
the Closing Date, the Trustee shall authenticate the Certificates to be issued
at the written direction of the Depositor, or any Affiliate thereof.

         SECTION 5.02. Certificate Register; Registration of Transfer and
Exchange of Certificates.

         (a) The Trustee shall maintain, or cause to be maintained in accordance
with the provisions of Section 5.09 hereof, a Certificate Register for the Trust
Fund in which, subject to the provisions of subsections (b) and (c) below and to
such reasonable regulations as it may prescribe, the Trustee shall provide for
the registration of Certificates and of Transfers and exchanges of Certificates
as herein provided. Upon surrender for registration of Transfer of any
Certificate, the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of the same
Class and of like aggregate Percentage Interest.

         At the option of a Certificateholder, Certificates may be exchanged for
other Certificates of the same Class in authorized denominations and evidencing
the same aggregate Percentage Interest upon surrender of the Certificates to be
exchanged at the office or agency of a Trustee. Whenever any Certificates are so
surrendered for exchange, the Trustee shall execute and the Trustee shall
authenticate and deliver the Certificates that the Certificateholder making the
exchange is entitled to receive. Every Certificate presented or surrendered for
registration of Transfer or exchange shall be accompanied by a written
instrument of Transfer in form satisfactory to a Trustee duly executed by the
holder thereof or his attorney duly authorized in writing.

         No service charge to the Certificateholders shall be made for any
registration of Transfer or exchange of Certificates, but payment of a sum
sufficient to cover any tax or governmental charge that

                                       85
<PAGE>

may be imposed in connection with any Transfer or exchange of Certificates may
be required. All Certificates surrendered for registration of Transfer or
exchange shall be canceled and subsequently destroyed by a Trustee in accordance
with such Trustee's customary procedures.

         (b) No Transfer of a Class C or Class P Certificate shall be made
unless such Transfer is made pursuant to an effective registration statement
under the Securities Act and any applicable state securities laws or is exempt
from the registration requirements under the Securities Act and such state
securities laws. In the event that a Transfer is to be made in reliance upon an
exemption from the Securities Act and such laws, in order to assure compliance
with the Securities Act and such laws, the Certificateholder desiring to effect
such Transfer and such Certificateholder's prospective transferee shall (except
with respect to the initial transfer of a Class C or Class P Certificate by
Merrill Lynch & Co. or, in connection with a transfer of a Class C or Class P
Certificate to the indenture trustee under an Indenture pursuant to which NIM
Notes are issued, whether or not such notes are guaranteed by the NIMs Insurer)
each certify to each Trustee in writing the facts surrounding the Transfer in
substantially the forms set forth in Exhibit F (the "Transferor Certificate")
and (i) deliver a letter in substantially the form of either Exhibit G (the
"Investment Letter") or Exhibit H (the "Rule 144A Letter") or (ii) there shall
be delivered to each Trustee an Opinion of Counsel that such Transfer may be
made pursuant to an exemption from the Securities Act, which Opinion of Counsel
shall not be an expense of the Depositor or the Trustee. The Depositor shall
provide to any Holder of a Class C or Class P Certificate and any prospective
transferee designated by any such Holder, information regarding the related
Certificates and the Mortgage Loans and such other information as shall be
necessary to satisfy the condition to eligibility set forth in Rule 144A(d)(4)
for Transfer of any such Certificate without registration thereof under the
Securities Act pursuant to the registration exemption provided by Rule 144A. The
Trustee shall cooperate with the Depositor in providing the Rule 144A
information referenced in the preceding sentence, including providing to the
Depositor such information in the possession of the Trustee regarding the
Certificates, the Mortgage Loans and other matters regarding the Trust Fund as
the Depositor shall reasonably request to meet its obligation under the
preceding sentence. Each Holder of a Class C or Class P Certificate desiring to
effect such Transfer shall, and does hereby agree to, indemnify the Depositor
and the Trustee against any liability that may result if the Transfer is not so
exempt or is not made in accordance with such federal and state laws.

         No Transfer of an ERISA-Restricted Certificate that is a Class R
Certificate or a Class R-X Certificate may be made to any Person that is an
employee benefit plan subject to Title I of ERISA, a plan subject to Section
4975 of the Code or a plan subject to any state, local or other federal law
substantively similar to the foregoing provisions of ERISA or the Code ("Similar
Law") (collectively, "Plan"), or to any Person directly or indirectly acquiring
a Class R Certificate or a Class R-X Certificate for, on behalf of, or with any
assets of any such Plan. Each Person to whom a Class R Certificate or a Class
R-X Certificate is to be transferred shall be required or deemed to represent
that it is not a Plan.

         No Transfer of an ERISA-Restricted Certificate that is a Class C or
Class P Certificate shall be made to any Person unless the Trustee has received
(A) a representation that such transferee is not a Plan and is not directly or
indirectly acquiring the Certificate by, on behalf of, or with any assets of any
such Plan, (B) if the Certificate has been the subject of an ERISA-Qualifying
Underwriting, a representation that such transferee is an insurance company that
is acquiring the Certificate with funds contained in an "insurance company
general account," as defined in Section V(e) of Prohibited Transaction Class
Exemption ("PTCE") 95-60, and the acquisition and holding of the Certificate are
covered and exempt under Sections I and III of PTCE 95-60, or (C) solely in the
case of a Definitive Certificate, an Opinion of Counsel satisfactory to the
Trustee to the effect that the acquisition and holding of such Certificate will
not constitute or result in a nonexempt prohibited transaction under ERISA or
the Code, or a violation of Similar Law, and will not subject the Trustee, the
Servicer or the Depositor to any obligation in addition

                                       86
<PAGE>

to those expressly undertaken in this Agreement, which Opinion of Counsel shall
not be an expense of the Trustee, the Servicer or the Depositor.

         For purposes of the two immediately preceding paragraphs of this
Subsection 5.02(b), other than clause (B) in the immediately preceding
paragraph, the representations as set forth therein shall be deemed to have been
made to the Trustee by the transferee's acceptance of an ERISA-Restricted
Certificate (or the acceptance by a Certificate Owner of the beneficial interest
in any Class of ERISA-Restricted Certificates). Notwithstanding any other
provision herein to the contrary, any purported Transfer of an ERISA Restricted
Certificate to or on behalf of a Plan without the delivery to the Trustee of a
representation or an Opinion of Counsel satisfactory to the Trustee as described
above shall be void and of no effect. The Trustee shall not be under any
liability to any Person for any registration or transfer of any ERISA-Restricted
Certificate that is in fact not permitted by this Section 5.02(b) nor shall the
Trustee be under any liability for making any payments due on such Certificate
to the Holder thereof or taking any other action with respect to such Holder
under the provisions of this Agreement so long as the transfer was registered by
the Trustee in accordance with the foregoing requirements. The Trustee shall be
entitled, but not obligated, to recover from any Holder of any ERISA-Restricted
Certificate that was in fact a Plan and that held such Certificate in violation
of this Section 5.02(b) all payments made on such ERISA-Restricted Certificate
at and after the time it commenced such holding. Any such payments so recovered
shall be paid and delivered to the last preceding Holder of such Certificate
that is not a Plan.

         (c) Each Person who has or who acquires any Ownership Interest in a
Class R Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions, and
the rights of each Person acquiring any Ownership Interest in a Class R
Certificate or Class R-X Certificate are expressly subject to the following
provisions:

                  (i) Each Person holding or acquiring any Ownership Interest in
         a Class R Certificate or Class R-X Certificate shall be a Permitted
         Transferee and shall promptly notify the Trustee of any change or
         impending change in its status as a Permitted Transferee.

                  (ii) No Ownership Interest in a Class R Certificate or Class
         R-X Certificate may be purchased, transferred or sold, directly or
         indirectly, except in accordance with the provisions hereof. No
         Ownership Interest in a Class R Certificate or Class R-X Certificate
         may be registered on the Closing Date or thereafter transferred, and
         the Trustee shall not register the Transfer of any Class R Certificate
         or Class R-X Certificate unless, in addition to the certificates
         required to be delivered to the Trustee under subparagraph (b) above,
         the Trustee shall have been furnished with an affidavit (a "Transfer
         Affidavit") of the initial owner or the proposed transferee in the form
         attached hereto as Exhibit E-1 and an affidavit of the proposed
         transferor in the form attached hereto as Exhibit E-2. In the absence
         of a contrary instruction from the transferor of a Class R Certificate
         or Class R-X Certificate, declaration (11) in Appendix A of the
         Transfer Affidavit may be left blank. If the transferor requests by
         written notice to the Trustee prior to the date of the proposed
         transfer that one of the two other forms of declaration (11) in
         Appendix A of the Transfer Affidavit be used, then the requirements of
         this Section 5.02(c)(ii) shall not have been satisfied unless the
         Transfer Affidavit includes such other form of declaration.

                  (iii) Each Person holding or acquiring any Ownership Interest
         in a Class R Certificate or Class R-X Certificate shall agree (A) to
         obtain a Transfer Affidavit from any other Person to whom such Person
         attempts to Transfer its Ownership Interest in a Class R Certificate or
         Class R-X Certificate, (B) to obtain a Transfer Affidavit from any
         Person for whom such Person is acting as nominee, trustee or agent in
         connection with any Transfer of a Class R Certificate or Class R-X
         Certificate and (C) not to Transfer its Ownership Interest in a Class R
         Certificate or Class R-X Certificate or to cause the Transfer of an
         Ownership Interest in a Class R Certificate or Class R-X

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<PAGE>

         Certificate to any other Person if it has actual knowledge that such
         Person is not a Permitted Transferee. Further, no transfer, sale or
         other disposition of any Ownership Interest in a Class R Certificate or
         Class R-X Certificate may be made to a person who is not a U.S. Person
         (within the meaning of Section 7701 of the Code) unless such person
         furnishes the transferor and the Trustee with a duly completed and
         effective Internal Revenue Service Form W-8ECI (or any successor
         thereto) and the Trustee consents to such transfer, sale or other
         disposition in writing.

                  (iv) Any attempted or purported Transfer of any Ownership
         Interest in a Class R Certificate or Class R-X Certificate in violation
         of the provisions of this Section 5.02(c) shall be absolutely null and
         void and shall vest no rights in the purported Transferee. If any
         purported transferee shall become a Holder of a Class R Certificate or
         Class R-X Certificate in violation of the provisions of this Section
         5.02(c), then the last preceding Permitted Transferee shall be restored
         to all rights as Holder thereof retroactive to the date of registration
         of Transfer of such Class R Certificate or Class R-X Certificate. The
         Trustee shall be under no liability to any Person for any registration
         of Transfer of a Class R Certificate or Class R-X Certificate that is
         in fact not permitted by Section 5.02(b) and this Section 5.02(c) or
         for making any payments due on such Certificate to the Holder thereof
         or taking any other action with respect to such Holder under the
         provisions of this Agreement so long as the Transfer was registered
         after receipt of the related Transfer Affidavit. The Trustee shall be
         entitled but not obligated to recover from any Holder of a Class R
         Certificate or Class R-X Certificate that was in fact not a Permitted
         Transferee at the time it became a Holder or, at such subsequent time
         as it became other than a Permitted Transferee, all payments made on
         such Class R Certificate or Class R-X Certificate at and after either
         such time. Any such payments so recovered by the Trustee shall be paid
         and delivered by the Trustee to the last preceding Permitted Transferee
         of such Certificate.

                  (v) At the option of the Holder of the Class R Certificate,
         the Class LTR Interest, the Class MTR Interest and the residual
         interest in the Upper Tier REMIC may be severed and represented by
         separate certificates; provided, however, that such separate
         certification may not occur until the NIMs Insurer and the Trustee
         receive an Opinion of Counsel to the effect that separate certification
         in the form and manner proposed would not result in the imposition of
         federal tax upon the Trust Fund or any of the REMICs provided for
         herein or cause any of the REMICs provided for herein to fail to
         qualify as a REMIC; and provided further, that the provisions of
         Sections 5.02(b) and (c) will apply to each such separate certificate
         as if the separate certificate were a Class R Certificate. If, as
         evidenced by an Opinion of Counsel, it is necessary to preserve the
         REMIC status of any of the REMICs provided for herein, the Class LTR
         Interest, the Class MTR Interest and the residual interest in the Upper
         Tier REMIC shall be severed and represented by separate Certificates.

                  (vi) At the option of the Holder of the Class R-X Certificate,
         the Class B1R Interest, the Class B2R Interest, the Class B3R Interest
         and the Class CR Interest may be severed and represented by separate
         certificates; provided, however, that such separate certification may
         not occur until the NIMs Insurer and the Trustee receive an Opinion of
         Counsel to the effect that separate certification in the form and
         manner proposed would not result in the imposition of federal tax upon
         the Trust Fund or any of the REMICs provided for herein or cause any of
         the REMICs provided for herein to fail to qualify as a REMIC; and
         provided further, that the provisions of Sections 5.02(b) and (c) will
         apply to each such separate certificate as if the separate certificate
         were a Class R-X Certificate. If, as evidenced by an Opinion of
         Counsel, it is necessary to preserve the REMIC status of any of the
         REMICs provided for herein, the Class B1R Interest, the Class B2R
         Interest, the Class B3R Interest and the Class CR Interest shall be
         severed and represented by separate Certificates.

                                       88
<PAGE>

         The restrictions on Transfers of a Class R Certificate and Class R-X
Certificate set forth in this Section 5.02(c) shall cease to apply (and the
applicable portions of the legend on a Class R Certificate and Class R-X
Certificate may be deleted) with respect to Transfers occurring after delivery
to the Trustee and the NIMs Insurer of an Opinion of Counsel, which Opinion of
Counsel shall not be an expense of the Trustee or the Depositor, to the effect
that the elimination of such restrictions will not cause any of the REMICs
provided for herein to fail to qualify as a REMIC at any time that the
Certificates are outstanding or result in the imposition of any tax on the Trust
Fund, any REMIC provided for herein, a Certificateholder or another Person. Each
Person holding or acquiring any Ownership Interest in a Class R Certificate or
Class R-X Certificate hereby consents to any amendment of this Agreement that,
based on an Opinion of Counsel furnished to the Trustee, is reasonably necessary
(a) to ensure that the record ownership of, or any beneficial interest in, a
Class R Certificate or Class R-X Certificate is not transferred, directly or
indirectly, to a Person that is not a Permitted Transferee and (b) to provide
for a means to compel the Transfer of a Class R Certificate or Class R-X
Certificate that is held by a Person that is not a Permitted Transferee to a
Holder that is a Permitted Transferee.

         (d) The transferor of the Class R Certificate or Class R-X Certificate
shall notify the Trustee in writing upon the transfer of the Class R Certificate
or Class R-X Certificate.

         (e) The preparation and delivery of all certificates, opinions and
other writings referred to above in this Section 5.02 shall not be an expense of
the Trust Fund, the Depositor or the Trustee.

         SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.

         If (a) any mutilated Certificate is surrendered to the Trustee or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate and of the ownership thereof and (b) there is delivered to
the Trustee and the NIMs Insurer such security or indemnity as may be required
by them to save each of them harmless, then, in the absence of notice to the
Trustee that such Certificate has been acquired by a bona fide purchaser, the
Trustee shall execute, authenticate and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of
like Class, tenor and Percentage Interest. In connection with the issuance of
any new Certificate under this Section 5.03, the Trustee may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the fees and
expenses of the Trustee) connected therewith. Any replacement Certificate issued
pursuant to this Section 5.03 shall constitute complete and indefeasible
evidence of ownership in the Trust Fund, as if originally issued, whether or not
the lost, stolen or destroyed Certificate shall be found at any time. All
Certificates surrendered to the Trustee under the terms of this Section 5.03
shall be canceled and destroyed by the Trustee in accordance with its standard
procedures without liability on its part.

         SECTION 5.04. Persons Deemed Owners.

         The NIMs Insurer, the Trustee and any agent of the NIMs Insurer or the
Trustee may treat the Person in whose name any Certificate is registered as the
owner of such Certificate for the purpose of receiving distributions as provided
in this Agreement and for all other purposes whatsoever, and neither the NIMs
Insurer nor the Trustee, nor any agent of the NIMs Insurer or the Trustee shall
be affected by any notice to the contrary.

         SECTION 5.05. Access to List of Certificateholders' Names and
Addresses.

         If three or more Certificateholders (a) request such information in
writing from the Trustee, (b) state that such Certificateholders desire to
communicate with other Certificateholders with respect to their rights under
this Agreement or under the Certificates, and (c) provide a copy of the
communication that such Certificateholders propose to transmit or if the NIMs
Insurer or the Depositor shall request such

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information in writing from the Trustee, then the Trustee shall, within ten
Business Days after the receipt of such request, provide the NIMs Insurer, the
Depositor or such Certificateholders at such recipients' expense the most recent
list of the Certificateholders of the Trust Fund held by the Trustee, if any.
The Depositor and every Certificateholder, by receiving and holding a
Certificate, agree that the Trustee shall not be held accountable by reason of
the disclosure of any such information as to the list of the Certificateholders
hereunder, regardless of the source from which such information was derived.

         SECTION 5.06. Book-Entry Certificates.

         The Regular Certificates, upon original issuance, shall be issued in
the form of one or more typewritten Certificates representing the Book-Entry
Certificates, to be delivered to the Depository by or on behalf of the
Depositor. The Book-Entry Certificates shall initially be registered on the
Certificate Register in the name of the Depository or its nominee, and no
Certificate Owner of a Book-Entry Certificate will receive a definitive
certificate representing such Certificate Owner's interest in such Certificates,
except as provided in Section 5.08. Unless and until definitive, fully
registered Certificates ("Definitive Certificates") have been issued to the
Certificate Owners of the Book-Entry Certificates pursuant to Section 5.08:

         (a) the provisions of this Section shall be in full force and effect;

         (b) the Depositor, the Trustee and the NIMs Insurer may deal with the
Depository and the Depository Participants for all purposes (including the
making of distributions) as the authorized representative of the respective
Certificate Owners of the Book-Entry Certificates;

         (c) registration of the Book-Entry Certificates may not be transferred
by the Trustee except to another Depository;

         (d) the rights of the respective Certificate Owners of the Book-Entry
Certificates shall be exercised only through the Depository and the Depository
Participants and shall be limited to those established by law and agreements
between the Owners of the Book-Entry Certificates and the Depository and/or the
Depository Participants. Pursuant to the Depository Agreement, unless and until
Definitive Certificates are issued pursuant to Section 5.08, the Depository will
make book-entry transfers among the Depository Participants and receive and
transmit distributions of principal and interest on the related Certificates to
such Depository Participants;

         (e) the Depository may collect its usual and customary fees, charges
and expenses from its Depository Participants;

         (f) the Trustee may rely and shall be fully protected in relying upon
information furnished by the Depository with respect to its Depository
Participants; and

         (g) to the extent that the provisions of this Section conflict with any
other provisions of this Agreement, the provisions of this Section shall
control.

         For purposes of any provision of this Agreement requiring or permitting
actions with the consent of, or at the direction of, Certificateholders
evidencing a specified percentage of the aggregate unpaid principal amount of
any Class of Certificates, such direction or consent may be given by Certificate
Owners (acting through the Depository and the Depository Participants) owning
Book-Entry Certificates evidencing the requisite percentage of principal amount
of such Class of Certificates.

         SECTION 5.07. Notices to Depository.

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         Whenever any notice or other communication is required to be given to
Certificateholders of the Class with respect to which Book-Entry Certificates
have been issued, unless and until Definitive Certificates shall have been
issued to the related Certificate Owners and the Trustee shall give all such
notices and communications to the Depository.

         SECTION 5.08. Definitive Certificates.

         If, after Book-Entry Certificates have been issued with respect to any
Certificates, (a) the Depository or the Depositor advises the Trustee that the
Depository is no longer willing, qualified or able to discharge properly its
responsibilities under the Depository Agreement with respect to such
Certificates and the Trustee or the Depositor is unable to locate a qualified
successor, (b) the Depositor notifies the Trustee and the Depository of its
intent to terminate the book entry system through the Depository and, upon
receipt of notice of such intent from the Depository, the Certificate Owners of
the Book-Entry Certificates agree to initiate such termination or (c) after the
occurrence and continuation of an Event of Default, Certificate Owners of such
Book-Entry Certificates having not less than 51% of the Voting Rights evidenced
by any Class of Book-Entry Certificates advise the Trustee and the Depository in
writing through the Depository Participants that the continuation of a
book-entry system with respect to Certificates of such Class through the
Depository (or its successor) is no longer in the best interests of the
Certificate Owners of such Class, then the Trustee shall notify all Certificate
Owners of such Book-Entry Certificates and the NIMs Insurer, through the
Depository, of the occurrence of any such event and of the availability of
Definitive Certificates to Certificate Owners of such Class requesting the same.
The Depositor shall provide the Trustee with an adequate inventory of
certificates to facilitate the issuance and transfer of Definitive Certificates.
Upon surrender to the Trustee of any such Certificates by the Depository,
accompanied by registration instructions from the Depository for registration,
the Trustee shall authenticate and deliver such Definitive Certificates. Neither
the Depositor nor the Trustee shall be liable for any delay in delivery of such
instructions and each may conclusively rely on, and shall be protected in
relying on, such instructions. Upon the issuance of such Definitive
Certificates, all references herein to obligations imposed upon or to be
performed by the Depository shall be deemed to be imposed upon and performed by
the Trustee, to the extent applicable with respect to such Definitive
Certificates and the Trustee shall recognize the Holders of such Definitive
Certificates as Certificateholders hereunder.

         SECTION 5.09. Maintenance of Office or Agency.

         The Trustee will maintain or cause to be maintained at its expense an
office or offices or agency or agencies where Certificates may be surrendered
for registration of transfer or exchange. The Trustee initially designates its
offices at Sixth Street and Marquette Avenue, Minneapolis, Minnesota 55479,
Attention: Corporate Trust Services - Merrill Lynch Mortgage Investors Inc.,
Series 2004-HE1 as offices for such purposes. The Trustee will give prompt
written notice to the Certificateholders of any change in such location of any
such office or agency.


                                   ARTICLE VI

                         THE DEPOSITOR AND THE SERVICER

         SECTION 6.01. Respective Liabilities of the Depositor and the Servicer.

         The Depositor and the Servicer shall each be liable in accordance
herewith only to the extent of the obligations specifically and respectively
imposed upon and undertaken by them herein.

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         SECTION 6.02. Merger or Consolidation of the Depositor or the Servicer.

         Except as provided in the next paragraph, the Depositor and the
Servicer will each keep in full effect its existence, rights and franchises as a
corporation or banking association under the laws of the United States or under
the laws of one of the States thereof and will each obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, or any of the Mortgage Loans and to perform
its respective duties under this Agreement.

         Any Person into which the Depositor or Servicer may be merged or
consolidated, or any Person resulting from any merger or consolidation to which
the Depositor or Servicer shall be a party, or any Person succeeding to the
business of the Depositor or Servicer, shall be the successor of the Depositor
or Servicer, as the case may be, hereunder, without the execution or filing of
any paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding (except for the execution of an
assumption agreement where such succession is not effected by operation of law);
provided, however, that the successor or surviving Person to a Servicer shall be
qualified to sell mortgage loans to, and to service mortgage loans on behalf of,
Fannie Mae or Freddie Mac.

         SECTION 6.03. Limitation on Liability of the Depositor, the Servicer
and Others.

         None of the Depositor, the Servicer nor any of the directors, officers,
employees or agents of the Depositor or the Servicer shall be under any
liability to the Trust Fund or the Certificateholders for any action taken or
for refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Depositor, the Servicer or any such Person against any
breach of representations or warranties made by it herein or protect the
Depositor, the Servicer or any such Person from any liability that would
otherwise be imposed by reasons of willful misfeasance, bad faith or negligence
in the performance of duties or by reason of reckless disregard of obligations
and duties hereunder. The Depositor, the Servicer and any director, officer,
employee or agent of the Depositor or the Servicer may rely in good faith on any
document of any kind prima facie properly executed and submitted by any Person
respecting any matters arising hereunder. The Depositor, the Servicer and any
director, officer, employee or agent of the Depositor or the Servicer shall be
indemnified by the Trust Fund and held harmless against any loss, liability or
expense, incurred in connection with the performance of their duties under this
agreement or incurred in connection with any audit, controversy or judicial
proceeding relating to a governmental taxing authority or any legal action
relating to this Agreement or the Certificates, other than any loss, liability
or expense incurred by reason of willful misfeasance, bad faith or negligence in
the performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. Neither the Depositor nor the Servicer shall
be under any obligation to appear in, prosecute or defend any legal action that
is not incidental to its respective duties hereunder and that in its opinion may
involve it in any expense or liability; provided, however, that any of the
Depositor or the Servicer may, in its discretion undertake any such action that
it may deem necessary or desirable in respect of this Agreement and the rights
and duties of the parties hereto and interests of the Servicer and the
Certificateholders hereunder. In such event, the legal expenses and costs of
such action and any liability resulting therefrom shall be, expenses, costs and
liabilities of the Trust Fund, and the Depositor and the Servicer shall be
entitled to be reimbursed therefor out of the Collection Account as provided by
Section 3.08 hereof.

         SECTION 6.04. Limitation on Resignation of Servicer.

         The Servicer shall not resign from the obligations and duties hereby
imposed on it except upon determination that its duties hereunder are no longer
permissible under applicable law. Any such determination permitting the
resignation of the Servicer shall be evidenced by an Opinion of Counsel to such
effect delivered to the Trustee and the NIMs Insurer. No such resignation shall
become effective

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until the Trustee or a successor servicer reasonably acceptable to the Trustee
and the NIMs Insurer is appointed and has assumed the Servicer's
responsibilities, duties, liabilities and obligations hereunder. Any such
resignation shall not relieve the Servicer of any of the obligations specified
in Section 7.01, 7.02 and 7.03 as obligations that survive the resignation or
termination of the Servicer.

         The Trustee, the Depositor and the NIMs Insurer hereby specifically (i)
consent to the pledge and assignment by the Servicer of all the Servicer's
right, title and interest in, to and under this Agreement to the Servicing
Rights Pledgee, if any, for the benefit of certain lenders, and (ii) agree that
upon delivery to the Trustee by the Servicing Rights Pledgee of a letter signed
by the Servicer whereby the Servicer shall resign as Servicer under this
Agreement, notwithstanding anything to the contrary which may be set forth in
Section 3.04 above, the Trustee shall appoint the Servicing Rights Pledgee or
its designee as successor servicer, provided that the Servicer's resignation
will not be effective unless, at the time of such appointment, the Servicing
Rights Pledgee or its designee (i) meets the requirements of a successor
servicer under this Agreement (including being acceptable to the Rating
Agencies), provided, that the consent and approval of the Trustee and the NIMs
Insurer shall be deemed to have been given to the Servicing Rights Pledgee or
its designee, and the Servicing Rights Pledgee and its designee, are hereby
agreed to be acceptable to the Trustee and the NIMS Insurer and (ii) agrees to
be subject to the terms of this Agreement. If, pursuant to any provision hereof,
the duties of the Servicer are transferred to a successor servicer, the entire
amount of the Servicing Fee and other compensation payable to the Servicer
pursuant hereto shall thereafter be payable to such successor servicer.

         SECTION 6.05. Errors and Omissions Insurance; Fidelity Bonds.

         The Servicer shall, for so long as it acts as servicer under this
Agreement, obtain and maintain in force (a) a policy or policies of insurance
covering errors and omissions in the performance of its obligations as servicer
hereunder, and (b) a fidelity bond in respect of its officers, employees and
agents. Each such policy and bond shall, together, meet the requirements of
Fannie Mae or Freddie Mac, unless the Servicer has obtained a waiver of such
requirements from the Seller. The Servicer shall provide the Trustee and the
NIMs Insurer, upon request with reasonable notice, with copies of such policies
and fidelity bond or a certification from the insurance provider evidencing such
policies and fidelity bond. The Servicer may be deemed to have complied with
this provision if an Affiliate of the Servicer has such errors and omissions and
fidelity bond coverage and, by the terms of such insurance policy or fidelity
bond, the coverage afforded thereunder extends to the Servicer. In the event
that any such policy or bond ceases to be in effect, the Servicer shall use its
reasonable best efforts to obtain a comparable replacement policy or bond from
an insurer or issuer meeting the requirements set forth above as of the date of
such replacement. Any such policy or fidelity bond shall by its terms not be
cancelable without thirty days' prior written notice to the Trustee and the NIMs
Insurer.

                                  ARTICLE VII

                        DEFAULT; TERMINATION OF SERVICER

         SECTION 7.01. Events of Default.

         "Event of Default," wherever used herein, means any one of the
following events:

                  (i) any failure by the Servicer to make any Advance to deposit
         in the Collection Account or the Certificate Account or to remit to the
         Trustee any payment (excluding a payment required to be made under
         Section 4.01 hereof) required to be made under the terms of this
         Agreement, which failure shall continue unremedied for three Business
         Days and, with respect to a payment required to be made under Section
         4.01 hereof, for one Business Day, after the date on which written
         notice of such failure shall have been given to the Servicer by the
         Trustee or the Depositor, or to the Trustee and the Servicer by the
         NIMs Insurer or the Holders of Certificates evidencing not less than
         25% of the Voting Rights evidenced by the Certificates; or

                  (ii) any failure by the Servicer to observe or perform in any
         material respect any other of the covenants or agreements on the part
         of the Servicer contained in this Agreement or

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<PAGE>

         any representation or warranty shall prove to be untrue, which failure
         or breach shall continue unremedied for a period of 60 days after the
         date on which written notice of such failure shall have been given to
         the Servicer by the Trustee or the Depositor, or to the Trustee by the
         NIMs Insurer or the Holders of Certificates evidencing not less than
         25% of the Voting Rights evidenced by the Certificates; or

                  (iii) a decree or order of a court or agency or supervisory
         authority having jurisdiction for the appointment of a receiver or
         liquidator in any insolvency, readjustment of debt, marshaling of
         assets and liabilities or similar proceedings, or for the winding-up or
         liquidation of its affairs, shall have been entered against the
         Servicer and such decree or order shall have remained in force
         undischarged or unstayed for a period of 60 consecutive days; or

                  (iv) consent by the Servicer to the appointment of a receiver
         or liquidator in any insolvency, readjustment of debt, marshaling of
         assets and liabilities or similar proceedings of or relating to the
         Servicer or all or substantially all of the property of the Servicer;
         or

                  (v) admission by a Servicer in writing of its inability to pay
         its debts generally as they become due, file a petition to take
         advantage of, or commence a voluntary case under, any applicable
         insolvency or reorganization statute, make an assignment for the
         benefit of its creditors, or voluntarily suspend payment of its
         obligations.

         If an Event of Default shall occur with respect to the Servicer, then,
and in each and every such case, so long as such Event of Default shall not have
been remedied within the applicable grace period, or solely with respect to
clause (i) above by 5:00 p.m. on the Servicer Remittance Date, the Trustee may
(with the written consent of the NIMs Insurer, except after a NIMs Insurer
Default), or at the direction of the NIMs Insurer or the Holders of Certificates
evidencing not less than 25% of the Voting Rights evidenced by the Certificates
(with the written consent of the NIMs Insurer, except after a NIMs Insurer
Default), shall, by notice in writing to the Servicer and the Servicing Rights
Pledgee, if any (with a copy to each Rating Agency), terminate all of the rights
and obligations of the Servicer under this Agreement and in and to the Mortgage
Loans and the proceeds thereof, other than its rights as a Certificateholder
hereunder. On or after the receipt by the Servicer of such written notice, all
authority and power of the Servicer hereunder, subject to and in accordance with
Section 6.04 hereof, whether with respect to the Mortgage Loans or otherwise,
shall pass to and be vested in the Trustee as successor servicer. To the extent
the Event of Default resulted from the failure of the Servicer to make a
required Advance, the Trustee shall thereupon make any Advance described in
Section 4.01 hereof subject to Section 3.04 hereof. The Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments, and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer and
endorsement or assignment of the Mortgage Loans and related documents, or
otherwise. Unless expressly provided in such written notice, no such termination
shall affect any obligation of the Servicer to pay amounts owed pursuant to
Article VIII. The Servicer agrees to cooperate with the Trustee in effecting the
termination of the Servicer's responsibilities and rights hereunder, including,
without limitation, the transfer to the Trustee of all cash amounts which shall
at the time be credited to the Collection Account, or thereafter be received
with respect to the Mortgage Loans. The Servicer and the Trustee shall promptly
notify the Rating Agencies of the occurrence of an Event of Default or an event
that, with notice, passage of time, other action or any combination of the
foregoing would be an Event of Default, such notice to be provided in any event
within two Business Days of such occurrence.

         Notwithstanding any termination of the activities of the Servicer
hereunder, the Servicer shall be entitled to receive, out of any late collection
of a Scheduled Payment on a Mortgage Loan that was due prior to the notice
terminating the Servicer's rights and obligations as Servicer hereunder and
received after such notice, that portion thereof to which the Servicer would
have been entitled pursuant to Sections

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3.08(a)(i) through (viii), and any other amounts payable to the Servicer
hereunder the entitlement to which arose prior to the termination of its
activities hereunder. Notwithstanding anything herein to the contrary, upon
termination of the Servicer hereunder, any liabilities of the Servicer which
accrued prior to such termination shall survive such termination.

         SECTION 7.02. [RESERVED].

         SECTION 7.03. Trustee to Act; Appointment of Successor.

         On and after the time the Servicer receives a notice of termination
pursuant to Section 7.01 or 7.02 hereof, the Trustee shall, to the extent
provided in Section 3.04, be the successor to the Servicer in its capacity as
servicer under this Agreement and the transactions set forth or provided for
herein and shall be subject to all the responsibilities, duties and liabilities
relating thereto placed on the Servicer by the terms and provisions hereof and
applicable law, including the obligation to make advances pursuant to Section
4.01. As compensation therefor, subject to the last paragraph of Section 7.01 or
7.02, as applicable, the Trustee shall be entitled to all fees, costs and
expenses relating to the Mortgage Loans that the Servicer would have been
entitled to if the Servicer had continued to act hereunder. Notwithstanding the
foregoing, if the Trustee has become the successor to the Servicer in accordance
with Section 7.01 or 7.02 hereof, the Trustee may, if it shall be unwilling to
so act, or shall, if it is prohibited by applicable law from making Advances
pursuant to Section 4.01 hereof or if it is otherwise unable to so act, appoint,
or petition a court of competent jurisdiction to appoint, any established
mortgage loan servicing institution the appointment of which successor shall be
approved by the NIMs Insurer and which does not adversely affect the then
current rating of the Certificates by each Rating Agency as the successor to the
Servicer hereunder in the assumption of all or any part of the responsibilities,
duties or liabilities of the Servicer hereunder. Any successor Servicer shall be
an institution that is acceptable to the NIMs Insurer and is a Fannie Mae and
Freddie Mac approved seller/servicer in good standing, that has a net worth of
at least $15,000,000, and that is willing to service the Mortgage Loans and
executes and delivers to the Depositor and the Trustee an agreement accepting
such delegation and assignment, that contains an assumption by such Person of
the rights, powers, duties, responsibilities, obligations and liabilities of the
Servicer (other than liabilities of the Servicer under Section 6.03 hereof
incurred prior to termination of the Servicer under Section 7.01 or 7.02), with
like effect as if originally named as a party to this Agreement; and provided
further that each Rating Agency acknowledges that its rating of the Certificates
in effect immediately prior to such assignment and delegation will not be
qualified or reduced as a result of such assignment and delegation. No
appointment of a successor to the Servicer hereunder shall be effective until
the Trustee and the NIMs Insurer shall have consented thereto, prior written
consent of the NIMs Insurer is obtained and written notice of such proposed
appointment shall have been provided by the Trustee to each Certificateholder.
The Trustee shall not resign as servicer until a successor servicer has been
appointed and has accepted such appointment. Pending appointment of a successor
to the Servicer hereunder, the Trustee, unless the Trustee is prohibited by law
from so acting, shall, subject to Section 3.04 hereof, act in such capacity as
hereinabove provided. In connection with such appointment and assumption, the
Trustee may make such arrangements for the compensation of such successor out of
payments on Mortgage Loans as it and such successor shall agree; provided,
however, that no such compensation shall be in excess of that permitted the
Servicer hereunder. The Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. Neither the Trustee nor any other successor servicer shall be deemed
to be in default hereunder by reason of any failure to make, or any delay in
making, any distribution hereunder or any portion thereof or any failure to
perform, or any delay in performing, any duties or responsibilities hereunder,
in either case caused by the failure of the Servicer to deliver or provide, or
any delay in delivering or providing, any cash, information, documents or
records to it.

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         Any successor to the Servicer as servicer shall give notice to the
Mortgagors of such change of servicer and shall, during the term of its service
as servicer maintain in force the policy or policies that the Servicer is
required to maintain pursuant to Section 6.05.

         In the event that the Servicer shall for any reason no longer be the
Servicer hereunder (including by reason of any Event of Default),
notwithstanding anything to the contrary above or anything to the contrary
which may be set forth in Section 3.04 above, the Trustee and the Depositor
hereby agree that within 10 Business Days of delivery to the Trustee by the
Servicing Rights Pledgee of a letter signed by the Servicer whereby the
Servicer shall resign as Servicer under this Agreement, or within 10 days of
Trustee's termination of the Servicer-pursuant to Section 7.01, the Servicing
Rights Pledgee or its designee shall be appointed as successor servicer;
provided that at the time of such appointment the Servicing Rights Pledgee or
such designee meets the requirements of a successor servicer set forth above
and ; and provided, further, that the consent and approval of the Trustee and
the NIMs Insurer shall be deemed to have been given to the Servicing Rights
Pledgee or its designee, and the Servicing Rights Pledgee and its designee are
hereby agreed to be acceptable to the Trustee and the NIMs Insurer, and the
Servicing Rights Pledgee or such designee agrees to be subject to the terms of
this Agreement.

         SECTION 7.04. Notification to Certificateholders.

         (a) Upon any termination of or appointment of a successor to the
Servicer, the Trustee shall give prompt written notice thereof to
Certificateholders, the NIMs Insurer and to each Rating Agency.

         (b) Within 60 days after the occurrence of any Event of Default, the
Trustee shall transmit by mail to all Certificateholders and the NIMs Insurer
notice of each such Event of Default hereunder known to the Trustee, unless such
Event of Default shall have been cured or waived.

                                  ARTICLE VIII

                             CONCERNING THE TRUSTEE

         SECTION 8.01. Duties of Trustee.

         The Trustee, prior to the occurrence of an Event of Default and after
the curing of all Events of Default that may have occurred, shall undertake to
perform such duties and only such duties as are specifically set forth in this
Agreement. In case an Event of Default has occurred and remains uncured, the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs. In case an Event of Default or other default by the
Servicer or the Depositor hereunder shall occur and be continuing, the Trustee,
shall, at the direction of the majority of the Certificateholders or the NIMs
Insurer, or may, proceed to protect and enforce its rights and the rights of the
Certificateholders or the NIMs Insurer under this Agreement by a suit, action or
proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this agreement or in aid
of the execution of any power granted in this Agreement or for the enforcement
of any other legal, equitable or other remedy, as the Trustee, being advised by
counsel, and subject to the foregoing, shall deem most effectual to protect and
enforce any of the rights of the Trustee, the NIMs Insurer and the
Certificateholders.

         The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee that are specifically required to be furnished pursuant to any provision
of this Agreement shall examine them to determine whether they conform to the
requirements of this Agreement. If any such instrument is found not to conform
to the requirements of this Agreement in a material manner, the Trustee shall
take action as it deems appropriate to have the instrument corrected, and if the
instrument is not corrected to the Trustee's satisfaction, the Trustee will
provide notice thereof to the NIMs Insurer and the Certificateholders and take
such further action as directed by the NIMs Insurer and the Certificateholders.

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      No provision of this Agreement shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own misconduct, its negligent failure to perform its obligations in
compliance with this Agreement, or any liability that would be imposed by reason
of its willful misfeasance or bad faith; provided, however, that:

            (i)   prior to the occurrence of an Event of Default, and after the
      curing of all such Events of Default that may have occurred, the duties
      and obligations of the Trustee shall be determined solely by the express
      provisions of this Agreement, the Trustee shall not be liable,
      individually or as Trustee, except for the performance of such duties and
      obligations as are specifically set forth in this Agreement, no implied
      covenants or obligations shall be read into this Agreement against the
      Trustee and the Trustee may conclusively rely, as to the truth of the
      statements and the correctness of the opinions expressed therein, upon any
      certificates or opinions furnished to the Trustee and conforming to the
      requirements of this Agreement that it reasonably believed in good faith
      to be genuine and to have been duly executed by the proper authorities
      respecting any matters arising hereunder;

            (ii)  the Trustee shall not be liable, individually or as Trustee,
      for an error of judgment made in good faith by a Responsible Officer or
      Responsible Officers of the Trustee, unless the Trustee was negligent or
      acted in bad faith or with willful misfeasance;

            (iii) the Trustee shall not be liable, individually or as Trustee,
      with respect to any action taken, suffered or omitted to be taken by it in
      good faith in accordance with the direction of the NIMs Insurer or the
      Holders of each Class of Certificates evidencing not less than 25% of the
      Voting Rights of such Class relating to the time, method and place of
      conducting any proceeding for any remedy available to the Trustee, or
      exercising any trust or power conferred upon the Trustee under this
      Agreement; and

            (iv)  except as otherwise expressly provided in this Agreement, if
      any default occurs in the making of a payment due under any Permitted
      Investment, or if a default occurs in any other performance required under
      any Permitted Investment, the Trustee may and, subject to Section 8.01 and
      Section 8.02, upon the request of the NIMs Insurer or the Holders of the
      Certificates representing more than 50% of the Voting Rights allocated to
      any Class of Certificates, shall take such action as may be appropriate to
      enforce such payment or performance, including the institution and
      prosecution of appropriate proceedings.

      SECTION 8.02. Certain Matters Affecting the Trustee.

      (a)   Except as otherwise provided in Section 8.01:

            (i)   the Trustee may request and rely upon and shall be protected
      in acting or refraining from acting upon any resolution, Officer's
      Certificate, certificate of auditors or any other certificate, statement,
      instrument, opinion, report, notice, request, consent, order, appraisal,
      bond or other paper or document believed by it to be genuine and to have
      been signed or presented by the proper party or parties;

            (ii)  the Trustee may consult with counsel of its choice and any
      Opinion of Counsel shall be full and complete authorization and protection
      in respect of any action taken or suffered or omitted by it hereunder in
      good faith and in accordance with such Opinion of Counsel;

            (iii) the Trustee shall not be liable, individually or as Trustee,
      for any action taken, suffered or omitted by it in good faith and believed
      by it to be authorized or within the discretion or rights or powers
      conferred upon it by this Agreement;

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            (iv)  prior to the occurrence of an Event of Default hereunder and
      after the curing of all Events of Default that may have occurred, the
      Trustee shall not be bound to make any investigation into the facts or
      matters stated in any resolution, certificate, statement, instrument,
      opinion, report, notice, request, consent, order, approval, bond or other
      paper or document, unless requested in writing so to do by the NIMs
      Insurer or the Holders of each Class of Certificates evidencing not less
      than 25% of the Voting Rights of such Class;

            (v)   the Trustee may execute any of the trusts or powers hereunder
      or perform any duties hereunder either directly or by or through agents,
      accountants or attorneys;

            (vi)  the Trustee shall not be required to expend its own funds or
      otherwise incur any financial liability in the performance of any of its
      duties hereunder if it shall have reasonable grounds for believing that
      repayment of such funds or adequate indemnity against such liability is
      not assured to it;

            (vii) the Trustee shall not be liable, individually or as Trustee,
      for any loss on any investment of funds pursuant to this Agreement (other
      than as issuer of the investment security);

            (viii) the Trustee shall not be deemed to have knowledge of an Event
      of Default until a Responsible Officer of the Trustee shall have received
      written notice thereof;

            (ix)  the Trustee shall be under no obligation to exercise any of
      the trusts or powers vested in it by this Agreement or to make any
      investigation of matters arising hereunder or to institute, conduct or
      defend any litigation hereunder or in relation hereto at the request,
      order or direction of any of the NIMs Insurer or the Certificateholders,
      pursuant to the provisions of this Agreement, unless the NIMs Insurer or
      such Certificateholders shall have offered to the Trustee reasonable
      security or indemnity against the costs, expenses and liabilities that may
      be incurred therein or thereby; and

            (x)   if requested by the Servicer, the Trustee may appoint the
      Servicer as the Trustee's attorney-in-fact in order to carry out and
      perform certain activities that are necessary or appropriate for the
      servicing and administration of the Mortgage Loans pursuant to this
      Agreement. Such appointment shall be evidenced by a power of attorney in
      such form as may be agreed to by the Trustee and the Servicer.

      (b)   All rights of action under this Agreement or under any of the
Certificates, enforceable by the Trustee, may be enforced by the Trustee without
the possession of any of the Certificates, or the production thereof at the
trial or other proceeding relating thereto, and any such suit, action or
proceeding instituted by the Trustee shall be brought in its name for the
benefit of all the Holders of the Certificates, subject to the provisions of
this Agreement.

      SECTION 8.03. Trustee Not Liable for Mortgage Loans.

      The recitals contained herein shall be taken as the statements of the
Depositor or the Servicer, as the case may be, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Agreement, of any Mortgage Loan, of any
guarantee of a NIMs Insurer or related document other than with respect to the
Trustee's execution and authentication of the Certificates. The Trustee shall
not be accountable for the use or application by the Depositor or the Servicer
of any funds paid to the Depositor or the Servicer in respect of the Mortgage
Loans or deposited in or withdrawn from the Collection Account or Certificate
Account by the Depositor or the Servicer.

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      SECTION 8.04. Trustee May Own Certificates.

      The Trustee in its individual or any other capacity may become the owner
or pledgee of Certificates with the same rights as it would have if it were not
the Trustee.

      SECTION 8.05. Trustee's Fees and Expenses.

      The Trustee shall be entitled to all earnings on or investment income with
respect to funds in or credited to the Certificate Account.

      SECTION 8.06. Indemnification of Trustee.

      (a)   The Trustee and its respective directors, officers, employees and
agents shall be entitled to indemnification from the Trust Fund for any loss,
liability or expense incurred in connection with any legal proceeding or
incurred without negligence or willful misconduct on their part, arising out of,
or in connection with, the acceptance or administration of the trusts created
hereunder or in connection with the performance of their duties hereunder,
including any applicable fees and expenses payable hereunder and the costs and
expenses of defending themselves against any claim in connection with the
exercise or performance of any of their powers or duties hereunder, provided
that:

            (i)   with respect to any such claim, the Trustee shall have given
      the Depositor and the Holders written notice thereof promptly after the
      Trustee shall have knowledge thereof; provided that failure to so notify
      shall not relieve the Trust Fund of the obligation to indemnify the
      Trustee; however, any reasonable delay by the Trustee to provide written
      notice to the Depositor and the Holders promptly after the Trustee shall
      have obtained knowledge of a claim shall not relieve the Trust Fund of the
      obligation to indemnify the Trustee under this Section 8.06;

            (ii)  while maintaining control over its own defense, the Trustee
      shall cooperate and consult fully with the Depositor in preparing such
      defense;

            (iii) notwithstanding anything to the contrary in this Section 8.06,
      the Trust Fund shall not be liable for settlement of any such claim by the
      Trustee entered into without the prior consent of the Depositor, which
      consent shall not be unreasonably withheld; and

            (iv)  any such loss, liability or expense to be indemnified by the
      Trust Fund must constitute an "unanticipated expense" of the Trust Fund
      within the meaning of Treasury Regulations Section 1.860G-1(b)(3)(ii).

      The provisions of this Section 8.06 shall survive any termination of this
Agreement and the resignation or removal of the Trustee and shall be construed
to include, but not be limited to any loss, liability or expense under any
environmental law.

      (b)   The Trustee shall be entitled to all reasonable expenses,
disbursements and advancements incurred or made by the Trustee in accordance
with this Agreement (including fees and expenses of its counsel and all persons
not regularly in its employment), except any such expenses, disbursements and
advancements that either (i) arise from its negligence, bad faith or willful
misconduct or (ii) do not constitute "unanticipated expenses" within the meaning
of Treasury Regulations Section 1.860G-1(b)(3)(ii).

      (c)   The Trustee's right to indemnification and reimbursement shall be
subject to a cap of $300,000 in the aggregate in any calendar year, excluding
(i) any Servicing Transfer Costs and (ii) any costs, damages or expenses
incurred by the Trustee in connection with any "high cost" home loans or any
predatory or abusive lending laws, which amounts shall in no case be subject to
any such limitation;

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<PAGE>

provided, however, that such cap shall apply only if NIM Notes have been issued
and shall cease to apply after the date on which any NIM Notes are paid in full
and all amounts which the NIMs Insurer is entitled to be paid or reimbursed
shall have been paid or reimbursed. Any amounts not in excess of this cap may be
withdrawn by the Trustee from the Certificate Account at any time.

      SECTION 8.07. Eligibility Requirements for Trustee.

      The Trustee hereunder shall, at all times, be a corporation or association
organized and doing business under the laws of a state or the United States of
America, authorized under such laws to exercise corporate trust powers having a
combined capital and surplus of at least $50,000,000, subject to supervision or
examination by federal or state authority and with a credit rating that would
not cause any of the Rating Agencies to reduce their respective ratings of any
Class of Certificates below the ratings issued on the Closing Date (or having
provided such security from time to time as is sufficient to avoid such
reduction) and reasonably acceptable to the NIMs Insurer. If such corporation or
association publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then
for the purposes of this Section 8.07 the combined capital and surplus of such
corporation or association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 8.07, the Trustee shall resign immediately in the
manner and with the effect specified in Section 8.08 hereof. The corporation or
national banking association serving as Trustee may have normal banking and
trust relationships with the Depositor and the NIMs Insurer and their respective
Affiliates; provided, however, that such corporation cannot be an Affiliate of
the Servicer other than the Trustee in its role as successor to the Servicer.

      SECTION 8.08. Resignation and Removal of Trustee.

      The Trustee may at any time resign and be discharged from the trusts
hereby created by (1) giving written notice of resignation to the Depositor, the
Servicer and the NIMs Insurer and by mailing notice of resignation by first
class mail, postage prepaid, to the Certificateholders at their addresses
appearing on the Certificate Register and each Rating Agency, not less than 60
days before the date specified in such notice when, subject to Section 8.09,
such resignation is to take effect, and (2) acceptance of appointment by a
successor trustee acceptable to the NIMs Insurer in accordance with Section 8.09
and meeting the qualifications set forth in Section 8.07. If no successor
trustee shall have been so appointed and have accepted appointment within 30
days after the giving of such notice or resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
trustee.

      If at any time (i) the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.07 hereof and shall fail to resign after
written request thereto by the Depositor or the NIMs Insurer, (ii) the Trustee
shall become incapable of acting, or shall be adjudged as bankrupt or insolvent,
or a receiver of the Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, or
(iii)(A) a tax is imposed with respect to the Trust Fund by any state in which
the Trustee or the Trust Fund is located, (B) the imposition of such tax would
be avoided by the appointment of a different trustee and (C) the Trustee fails
to indemnify the Trust Fund against such tax, then the Depositor or the NIMs
Insurer may remove the Trustee and the Depositor with the consent of the NIMs
Insurer shall promptly appoint a successor trustee by written instrument, in
triplicate, one copy of which instrument shall be delivered to the Trustee, one
copy of which shall be delivered to the Servicer and one copy of which shall be
delivered to the successor trustee.

      The Holders evidencing at least 51% of the Voting Rights of all Classes of
Certificates, with the consent of the NIMs Insurer, or the NIMs Insurer upon
failure of the Trustee to perform its obligations

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<PAGE>

hereunder may at any time remove the Trustee and the Depositor shall appoint a
successor trustee by written instrument or instruments, in triplicate, signed by
such Holders or their attorneys-in-fact duly authorized (or by the NIMs
Insurer), one complete set of which instruments shall be delivered by the
successor Trustee to the Servicer, one complete set to the Trustee so removed
and one complete set to the successor so appointed. Notice of any removal of the
Trustee shall be given to the NIMs Insurer and each Rating Agency by the
Successor Trustee.

      Any resignation or removal of the Trustee and appointment of a successor
trustee pursuant to any of the provisions of this Section 8.08 shall become
effective upon acceptance of appointment by the successor trustee as provided in
Section 8.09 hereof.

      SECTION 8.09. Successor Trustee.

      Any successor trustee appointed as provided in Section 8.08 hereof shall
execute, acknowledge and deliver to the Depositor and to its predecessor
trustee, the NIMs Insurer and the Servicer an instrument accepting such
appointment hereunder and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with the
like effect as if originally named as trustee herein.

      No successor trustee shall accept appointment as provided in this Section
8.09 unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 8.07 hereof and its appointment shall
not adversely affect the then current rating of the Certificates.

      Upon acceptance of appointment by a successor trustee as provided in this
Section 8.09, the Depositor shall mail notice of the succession of such trustee
hereunder to all Holders of Certificates. If the Depositor fails to mail such
notice within ten days after acceptance of appointment by the successor trustee,
the successor trustee shall cause such notice to be mailed at the expense of the
Depositor.

      SECTION 8.10. Merger or Consolidation of Trustee.

      Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided that such corporation shall be eligible under the provisions of Section
8.07 hereof without the execution or filing of any paper or further act on the
part of any of the parties hereto, anything herein to the contrary
notwithstanding (except for the execution of an assumption agreement where such
succession is not effected by operation of law).

      SECTION 8.11. Appointment of Co-Trustee or Separate Trustee.

      Notwithstanding any other provisions of this Agreement, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust Fund or property securing any Mortgage Note may at the time be
located, the Servicer and the Trustee acting jointly shall have the power and
shall execute and deliver all instruments to appoint one or more Persons
approved by the Trustee and the NIMs Insurer to act as co-trustee or co-trustees
jointly with the Trustee, or separate trustee or separate trustees, of all or
any part of the Trust Fund, and to vest in such Person or Persons, in such
capacity and for the benefit of the Certificateholders, such title to the Trust
Fund or any part thereof, whichever is applicable, and, subject to the other
provisions of this Section 8.11, such powers, duties, obligations, rights and
trusts as the Servicer and the Trustee may consider necessary or desirable. Any
such co-trustee or separate trustee shall be subject to the written approval of
the Servicer and the NIMs

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Insurer. The Trustee shall not be liable for the actions of any co-trustee;
provided, the appointment of a co-trustee shall not relieve the Trustee of its
obligations hereunder. If the Servicer and the NIMs Insurer shall not have
joined in such appointment within 15 days after the receipt by it of a request
to do so, or in the case an Event of Default shall have occurred and be
continuing, the Trustee alone shall have the power to make such appointment. No
co-trustee or separate trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 8.07 and no notice to
Certificateholders of the appointment of any co-trustee or separate trustee
shall be required under Section 8.09.

      Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:

            (i)   All rights, powers, duties and obligations conferred or
      imposed upon the Trustee, except for the obligation of the Trustee under
      this Agreement to advance funds on behalf of the Servicer, shall be
      conferred or imposed upon and exercised or performed by the Trustee and
      such separate trustee or co-trustee jointly (it being understood that such
      separate trustee or co-trustee is not authorized to act separately without
      the Trustee joining in such act), except to the extent that under any law
      of any jurisdiction in which any particular act or acts are to be
      performed (whether as Trustee hereunder or as successor to the Servicer
      hereunder), the Trustee shall be incompetent or unqualified to perform
      such act or acts, in which event such rights, powers, duties and
      obligations (including the holding of title to the Trust Fund or any
      portion thereof in any such jurisdiction) shall be exercised and performed
      singly by such separate trustee or co-trustee, but solely at the direction
      of the Trustee;

            (ii)  No trustee hereunder shall be held personally liable by reason
      of any act or omission of any other trustee hereunder; and

            (iii) The Trustee with the consent of the NIMs Insurer may at any
      time accept the resignation of or remove any separate trustee or
      co-trustee.

      Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then separate trustees and co-trustees, as
effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VIII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicer, the NIMs Insurer and the Depositor.

      Any separate trustee or co-trustee may, at any time, constitute the
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.

      SECTION 8.12. Tax Matters.

      (a)   It is intended that each of the REMICs provided for herein shall
constitute, and that the affairs of the Trust Fund shall be conducted so as to
allow each such REMIC to qualify as, a "real estate mortgage investment conduit"
as defined in and in accordance with the REMIC Provisions. In furtherance of
such intention, the Trustee covenants and agrees that it shall act as agent (and
the Trustee is

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<PAGE>

hereby appointed to act as agent) on behalf of each of the REMICs provided for
herein and that in such capacity it shall: (a) prepare and file, or cause to be
prepared and filed, in a timely manner, a U.S. Real Estate Mortgage Investment
Conduit Income Tax Return (Form 1066 or any successor form adopted by the
Internal Revenue Service) and prepare and file or cause to be prepared and filed
with the Internal Revenue Service and applicable state or local tax authorities
income tax or information returns for each taxable year with respect to each of
the REMICs provided for herein, containing such information and at the times and
in the manner as may be required by the Code or state or local tax laws,
regulations, or rules, and furnish or cause to be furnished to
Certificateholders the schedules, statements or information at such times and in
such manner as may be required thereby; (b) within thirty days of the Closing
Date, furnish or cause to be furnished to the Internal Revenue Service, on Forms
8811 or as otherwise may be required by the Code, the name, title, address, and
telephone number of the person that the holders of the Certificates may contact
for tax information relating thereto, together with such additional information
as may be required by such Form, and update such information at the time or
times in the manner required by the Code for each of the REMICs provided for
herein; (c) make or cause to be made elections, on behalf of each of the REMICs
provided for herein to be treated as a REMIC on the federal tax return of such
REMICs for their first taxable years (and, if necessary, under applicable state
law); (d) prepare and forward, or cause to be prepared and forwarded, to the
Certificateholders and to the Internal Revenue Service and, if necessary, state
tax authorities, all information returns and reports as and when required to be
provided to them in accordance with the REMIC Provisions, including without
limitation, the calculation of any original issue discount using the Prepayment
Assumption; (e) provide information necessary for the computation of tax imposed
on the transfer of a Class R Certificate or Class R-X Certificate to a Person
that is not a Permitted Transferee, or an agent (including a broker, nominee or
other middleman) of a Person that is not a Permitted Transferee, or a
pass-through entity in which a Person that is not a Permitted Transferee is the
record holder of an interest (the reasonable cost of computing and furnishing
such information may be charged to the Person liable for such tax); (f) to the
extent that they are under its control conduct the affairs of each of the REMICs
provided for herein at all times that any Certificates are outstanding so as to
maintain the status of each of the REMICs provided for herein as a REMIC under
the REMIC Provisions; (g) not knowingly or intentionally take any action or omit
to take any action that would cause the termination of the REMIC status of any
of the REMICs provided for herein or result in the imposition of tax upon any
such REMIC; (h) pay, from the sources specified in the last paragraph of this
Section 8.12, the amount of any federal, state and local taxes, including
prohibited transaction taxes as described below, imposed on each of the REMICs
provided for herein prior to the termination of the Trust Fund when and as the
same shall be due and payable (but such obligation shall not prevent the Trustee
or any other appropriate Person from contesting any such tax in appropriate
proceedings and shall not prevent the Trustee from withholding payment of such
tax, if permitted by law, pending the outcome of such proceedings); (i) sign or
cause to be signed federal, state or local income tax or information returns;
(j) maintain records relating to each of the REMICs provided for herein,
including but not limited to the income, expenses, assets and liabilities of
each of the REMICs provided for herein, and the fair market value and adjusted
basis of the Trust Fund property determined at such intervals as may be required
by the Code, as may be necessary to prepare the foregoing returns, schedules,
statements or information; and (k) as and when necessary and appropriate,
represent each of the REMICs provided for herein in any administrative or
judicial proceedings relating to an examination or audit by any governmental
taxing authority, request an administrative adjustment as to any taxable year of
any of the REMICs provided for herein, enter into settlement agreements with any
governmental taxing agency, extend any statute of limitations relating to any
tax item of any of the REMICs provided for herein, and otherwise act on behalf
of each of the REMICs provided for herein in relation to any tax matter
involving any of such REMICs or any controversy involving the Trust Fund.

      In order to enable the Trustee to perform its duties as set forth herein,
the Depositor shall provide, or cause to be provided, to the Trustee within 10
days after the Closing Date all information or data that the Trustee requests in
writing and determines to be relevant for tax purposes to the valuations and

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offering prices of the Certificates, including, without limitation, the price,
yield, prepayment assumption and projected cash flows of the Certificates and
the Mortgage Loans. Thereafter, the Depositor shall provide to the Trustee
promptly upon written request therefor, any such additional information or data
that the Trustee may, from time to time, request in order to enable the Trustee
to perform its duties as set forth herein. The Depositor hereby agrees to
indemnify the Trustee for any losses, liabilities, damages, claims or expenses
of the Trustee arising from any errors or miscalculations of the Trustee that
result from any failure of the Depositor to provide, or to cause to be provided,
accurate information or data to the Trustee on a timely basis.

      In the event that any tax is imposed on "prohibited transactions" of any
of the REMICs provided for herein as defined in Section 860F(a)(2) of the Code,
on the "net income from foreclosure property" of the any of such REMICs as
defined in Section 860G(c) of the Code, on any contribution to the Trust Fund
after the Startup Day pursuant to Section 860G(d) of the Code, or any other tax
is imposed, if not paid as otherwise provided for herein, such tax shall be paid
by (i) the Trustee, if any such other tax arises out of or results from a breach
by the Trustee of any of its obligations under this Agreement or as a result of
the location of the Trustee, (ii) any party hereto (other than the Trustee) to
the extent any such other tax arises out of or results from a breach by such
other party of any of its obligations under this Agreement or as a result of the
location of such other party or (iii) in all other cases, or in the event that
any liable party here fails to honor its obligations under the preceding clauses
(i) or (ii), any such tax will be paid first with amounts otherwise to be
distributed to the Class R Certificateholders (pro rata) pursuant to Section
4.04, and second with amounts (other than amounts derived by the Trust Fund from
a payment on the Cap Contract) otherwise to be distributed to all other
Certificateholders in the following order of priority: first, to the Class C
Certificates (pro rata), second, to the Class B-3 Certificates (pro rata),
third, to the Class B-2 Certificates (pro rata), fourth, to the Class B-1
Certificates (pro rata), fifth, to the Class M-2 Certificates (pro rata), sixth,
to the Class M-1 Certificates (pro rata) and seventh, to the Class A
Certificates and Class R Certificate (pro rata). Notwithstanding anything to the
contrary contained herein, to the extent that such tax is payable by the Class R
Certificate, the Trustee is hereby authorized pursuant to such instruction to
retain on any Distribution Date, from the Holders of the Class R Certificate
(and, if necessary, from the Holders of all other Certificates in the priority
specified in the preceding sentence), funds otherwise distributable to such
Holders in an amount sufficient to pay such tax. The Trustee agrees to promptly
notify in writing the party liable for any such tax of the amount thereof and
the due date for the payment thereof.

      (b)   Each of the Depositor and the Trustee agrees not to knowingly or
intentionally take any action or omit to take any action that would cause the
termination of the REMIC status of any of the REMICs provided for herein or
result in the imposition of a tax upon any of the REMICs provided for herein.

                                   ARTICLE IX

                                   TERMINATION

      SECTION 9.01. Termination upon Liquidation or Repurchase of all Mortgage
Loans.

      (a)   Subject to Section 9.03, the obligations and responsibilities of the
Depositor, the Servicer and the Trustee created hereby with respect to the Trust
Fund shall terminate upon the earlier of (a) an Optional Termination and (b) the
later of (i) the maturity or other liquidation of the last Mortgage Loan
remaining in the Trust Fund (or any Advance with respect thereto) and the
disposition of all REO Property and (ii) the distribution to Certificateholders
of all amounts required to be distributed to them pursuant to this Agreement, as
applicable. In no event shall the trusts created hereby continue beyond the
earlier of (i) the expiration of 21 years from the death of the last survivor of
the descendants of Joseph P.

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Kennedy, the late Ambassador of the United States to the Court of St. James's,
living on the date hereof and (ii) the Latest Possible Maturity Date.

      (b)   On or before the Determination Date following the Initial Optional
Termination Date, the Trustee shall attempt to terminate the Trust Fund by
conducting an auction of all of the Mortgage Loans and REO Properties via a
solicitation of bids from at least three (3) bidders, each of which shall be a
nationally recognized participant in mortgage finance (the "Auction"). The
Depositor and the Trustee agree to work in good faith to develop bid procedures
in advance of the Initial Optional Termination Date to govern the operation of
the Auction. The Trustee shall be entitled to retain an investment banking firm
and/or other agents in connection with the Auction, the cost of which shall be
included in the Optional Termination Price (unless an Optional Termination does
not occur in which case such costs shall be an expense of the Trust Fund). The
Trustee shall accept the highest bid received at the Auction; provided that the
amount of such bid equals or exceeds the Optional Termination Price. The Trustee
shall determine the Optional Termination Price based upon information provided
by (i) the Servicer with respect to the amounts described in clauses (A) and (B)
of the definition of "Optional Termination Price" (other than Trustee expenses)
and (ii) the Depositor with respect to the information described in clause (C)
of the definition of "Optional Termination Price." The Trustee may conclusively
rely upon the information provided to it in accordance with the immediately
preceding sentence and shall not have any liability for the failure of any party
to provide such information.

      If an Optional Termination does not occur as a result of the Auction's
failure to achieve the Optional Termination Price, the NIMs Insurer (or the
Servicer , if there is not a NIMs Insurer at such time) may, on any Distribution
Date following such Auction, at its option, terminate the Trust Fund by
purchasing all of the Mortgage Loans and REO Properties at a price equal to the
Optional Termination Price. In the event that there is a NIMs Insurer at the
time of the Auction, the Auction fails to achieve the Optional Termination Price
and the NIMs Insurer does not exercise its option to terminate the Trust Fund on
the first Distribution Date on which it is able to exercise such option, the
Servicer may, at such time, at its option, terminate the Trust Fund by
purchasing all of the Mortgage Loans and REO Properties at a price equal to the
Optional Termination Price. In connection with such termination, the Optional
Termination Price shall be delivered to the Trustee no later than the Business
Day immediately preceding the related Distribution Date. Notwithstanding
anything to the contrary herein, the Optional Termination Amount paid to the
Trustee by the winning bidder at the Auction or by the NIMs Insurer or the
Servicer shall be deposited by the Trustee directly into the Certificate Account
immediately upon receipt. Upon any termination as a result of an Auction, the
Trustee shall, out of the Optional Termination Amount deposited into the
Certificate Account, (x) retain for its own account, its costs and expenses
necessary to conduct the Auction and any other unreimbursed amounts owing to it
(without regard to the limitation contained in Section 8.06(c)) and (y) pay to
the Servicer, the aggregate amount of any unreimbursed out-of-pocket costs and
expenses owed to the servicer and any unpaid or unreimbursed Servicing Fees,
Advances and Servicing Advances.

      (c)   Notwithstanding anything to the contrary in clause (b) above, in the
event that the Trustee receives the written opinion of a nationally recognized
participant in mortgage finance acceptable to the Seller that the Mortgage Loans
and REO Properties to be included in the Auction will not be saleable at a price
sufficient to achieve the Optional Termination Price, the Trustee need not
conduct the Auction. In such event, the NIMs Insurer, if any, and the Servicer
in the event the NIMs Insurer declines to exercise its option, shall have the
option to purchase the Mortgage Loans and REO Properties at the Optional
Termination Price as of the Initial Optional Termination Date.

      SECTION 9.02. Final Distribution on the Certificates.

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      If on any Determination Date, (i) the Trustee determines that there are no
Outstanding Mortgage Loans and no other funds or assets in the Trust Fund other
than the funds in the Collection Account, the Trustee shall send a final
distribution notice promptly to each Certificateholder and the NIMs Insurer or
(ii) the Trustee determines that a Class of Certificates shall be retired after
a final distribution on such Class, the Trustee shall notify the
Certificateholders within seven (7) Business Days after such Determination Date
that the final distribution in retirement of such Class of Certificates is
scheduled to be made on the immediately following Distribution Date. Any final
distribution made pursuant to the immediately preceding sentence will be made
only upon presentation and surrender of the Certificates at the office of the
Trustee.

      Notice of any termination of the Trust Fund, specifying the Distribution
Date on which Certificateholders may surrender their Certificates for payment of
the final distribution and cancellation, shall be given promptly by the Trustee
by letter to Certificateholders mailed no later than the last calendar day of
the month immediately preceding the month of such final distribution (or with
respect to an Auction, mailed no later than one Business Day following
completion of such Auction). Any such notice shall specify (a) the Distribution
Date upon which final distribution on the Certificates will be made upon
presentation and surrender of Certificates at the office therein designated, (b)
the location of the office or agency at which such presentation and surrender
must be made, and (c) that the Record Date otherwise applicable to such
Distribution Date is not applicable, distributions being made only upon
presentation and surrender of the Certificates at the office therein specified.
The Trustee will give such notice to the NIMs Insurer and each Rating Agency at
the time such notice is given to Certificateholders.

      In the event such notice is given, the Servicer shall cause all funds in
the Collection Account to be deposited in the Certificate Account on the
Business Day prior to the applicable Distribution Date in an amount equal to the
final distribution in respect of the Certificates. Upon such final deposit with
respect to the Trust Fund and the receipt by the Trustee of a Request for
Release therefor, the Trustee shall promptly release to the Trustee or the NIMs
Insurer, as applicable, the Mortgage Files for the Mortgage Loans.

      Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed to Certificateholders of each Class the amounts
allocable to such Certificates held in the Certificate Account in the order and
priority set forth in Section 4.04 hereof on the final Distribution Date and in
proportion to their respective Percentage Interests.

      In the event that any affected Certificateholders shall not surrender
Certificates for cancellation within six months after the date specified in the
above mentioned written notice, the Trustee shall give a second written notice
to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
six months after the second notice all the applicable Certificates shall not
have been surrendered for cancellation, the Trustee may take appropriate steps,
or may appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets that remain a part of
the Trust Fund. If within one year after the second notice all Certificates
shall not have been surrendered for cancellation, the Class R Certificateholders
shall be entitled to all unclaimed funds and other assets of the Trust Fund that
remain subject hereto. Upon payment to the Class R Certificateholders of such
funds and assets, the Trustee shall have no further duties or obligations with
respect thereto.

      SECTION 9.03. Additional Termination Requirements.

      (a)   In the event the Trustee, the NIMs Insurer or the Servicer completes
an Optional Termination as provided in Section 9.01, the Trust Fund shall be
terminated in accordance with the following additional requirements, unless the
Trustee has been supplied with an Opinion of Counsel, at

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the expense of the Trustee, the NIMs Insurer or the Servicer, as applicable, to
the effect that the failure of the Trust Fund to comply with the requirements of
this Section 9.03 will not (i) result in the imposition of taxes on "prohibited
transactions" of any of the REMICs provided for herein as defined in Section
860F of the Code, or (ii) cause any of the REMICs provided for herein to fail to
qualify as a REMIC at any time that any Certificates are outstanding:

            (i)   The Depositor shall establish a 90-day liquidation period and
      notify the Trustee thereof, which shall in turn specify the first day of
      such period in a statement attached to the final tax returns of each of
      the REMICs provided for herein pursuant to Treasury Regulation Section
      1.860F-1. The Depositor shall satisfy all the requirements of a qualified
      liquidation under Section 860F of the Code and any regulations thereunder,
      as evidenced by an Opinion of Counsel obtained at the expense of the
      Trustee or the NIMs Insurer, as applicable;

            (ii)  During such 90-day liquidation period, and at or prior to the
      time of making the final payment on the Certificates, the Depositor as
      agent of the Trustee shall sell all of the assets of the Trust Fund for
      cash; and

            (iii) At the time of the making of the final payment on the
      Certificates, the Trustee shall distribute or credit, or cause to be
      distributed or credited, to the Class R Certificateholders all cash on
      hand (other than cash retained to meet outstanding claims known to the
      Trustee), and the Trust Fund shall terminate at that time, whereupon the
      Trustee shall have no further duties or obligations with respect to sums
      distributed or credited to the Class R Certificateholders.

      (b)   By their acceptance of the Certificates, the Holders thereof hereby
authorize the Depositor to specify the 90-day liquidation period for the Trust
Fund, which authorization shall be binding upon all successor
Certificateholders.

      (c)   Upon the written request of the Depositor, the Trustee as agent for
each REMIC hereby agrees to adopt and sign such a plan of complete liquidation
as provided to it by the Depositor. The Trustee's obligation to adopt and sign
such plan of complete liquidation is subject to the Trustee's receipt of the
Opinion of Counsel referred to in Section 9.03(a)(i). In addition, the Trustee
shall take such other action in connection therewith as may be reasonably
requested by the Depositor.

                                   ARTICLE X
                            MISCELLANEOUS PROVISIONS

      SECTION 10.01. Amendment.

      This Agreement may be amended from time to time by the Depositor, the
Servicer and the Trustee, with the consent of the NIMs Insurer and without the
consent of any of the Certificateholders, to

            (i)   To cure any ambiguity or correct any mistake,

            (ii)  To correct, modify or supplement any provision herein which
      may be inconsistent with any other provision herein,

            (iii) To add any other provisions with respect to matters or
      questions arising under this Agreement, or

            (iv)  To modify, alter, amend, add to or rescind any of the terms or
      provisions contained in this Agreement, provided, however, that, in the
      case of clauses (iii) and (iv), such amendment will not, as evidenced by
      an Opinion of Counsel addressed to the Trustee to such

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      effect, adversely affect in any material respect the interests of any
      Holder; provided, further, however, that such amendment will be deemed not
      to adversely affect in any material respect the interest of any Holder if
      the Person requesting such amendment obtains a letter from each Rating
      Agency stating that such amendment will not result in a reduction or
      withdrawal of its rating of any Class of the Certificates, it being
      understood and agreed that any such letter in and of itself will not
      represent a determination as to the materiality of any such amendment and
      will represent a determination only as to the credit issues affecting any
      such rating.

      Notwithstanding the foregoing, without the consent of the
Certificateholders, the Depositor, the Servicer and the Trustee may at any time
and from time to time amend this Agreement to modify, eliminate or add to any of
its provisions to such extent as shall be necessary or appropriate to maintain
the qualification of any of the REMICs provided for herein as REMICs under the
Code or to avoid or minimize the risk of the imposition of any tax on the Trust
Fund or any of the REMICs provided for herein pursuant to the Code that would be
a claim against the Trust Fund at any time prior to the final redemption of the
Certificates, provided that the Trustee and the NIMs Insurer have been provided
an Opinion of Counsel addressed to the Trustee, which opinion shall be an
expense of the party requesting such amendment but in any case shall not be an
expense of the Trustee, to the effect that such action is necessary or
appropriate to maintain such qualification or to avoid or minimize the risk of
the imposition of such a tax.

      This Agreement may also be amended from time to time by the
Depositor, the Servicer, the Trustee and the Holders of the Certificates
affected thereby evidencing not less than 66 2/3% of the Voting Rights, with the
consent of the NIMs Insurer, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
of modifying in any manner the rights of the Holders of Certificates; provided,
however, that no such amendment shall (i) reduce in any manner the amount of, or
delay the timing of, payments required to be distributed on any Certificate
without the consent of the Holder of such Certificate, (ii) adversely affect in
any material respect the interests of the Holders of any Class of Certificates
in a manner other than as described in (i), without the consent of the Holders
of Certificates of such Class evidencing 66 2/3% or more of the Voting Rights of
such Class or (iii) reduce the aforesaid percentages of Certificates the Holders
of which are required to consent to any such amendment without the consent of
the Holders of all such Certificates then outstanding.

      Notwithstanding any contrary provision of this Agreement, the Trustee
shall not consent to any amendment to this Agreement unless it shall have first
received an Opinion of Counsel addressed to the Trustee, which opinion shall be
an expense of the party requesting such amendment but in any case shall not be
an expense of the Trustee, to the effect that such amendment is permitted
hereunder and will not cause the imposition of any tax on the Trust Fund, any of
the REMICs provided for herein or the Certificateholders or cause any of the
REMICs provided for herein to fail to qualify as a REMIC at any time that any
Certificates are outstanding. A copy of such Opinion of Counsel shall be
provided to the NIMs Insurer.

      Promptly after the execution of any amendment to this Agreement requiring
the consent of Certificateholders, the Trustee or upon the written request of
the Trustee to the Servicer, the Servicer shall furnish written notification of
the substance of such amendment to each Certificateholder, the NIMs Insurer and
each Rating Agency.

      It shall not be necessary for the consent of Certificateholders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent shall approve the substance thereof. The manner of
obtaining such consents and of evidencing the authorization of the

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execution thereof by Certificateholders shall be subject to such reasonable
regulations as the Trustee may prescribe.

      Nothing in this Agreement shall require the Trustee or the Servicer to
enter into an amendment without receiving an Opinion of Counsel, satisfactory to
the Trustee or the Servicer that (i) such amendment is permitted and is not
prohibited by this Agreement and that all requirements for amending this
Agreement have been complied with; and (ii) either (A) the amendment does not
adversely affect in any material respect the interests of any Certificateholder
or (B) the conclusion set forth in the immediately preceding clause (A) is not
required to be reached pursuant to this Section 10.01.

      The Trustee may, but shall not be obligated to, enter into any supplement,
modification or waiver which affects its rights, duties or obligations
hereunder.

      SECTION 10.02. Counterparts.

      This Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be an original, and
such counterparts shall constitute but one and the same instrument.

      SECTION 10.03. Governing Law.

      THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO
BE PERFORMED IN THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES HERETO AND THE CERTIFICATEHOLDERS SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES
THEREOF.

      SECTION 10.04. Intention of Parties.

      It is the express intent of the parties hereto that the conveyance of the
Mortgage Notes, Mortgages, assignments of Mortgages, title insurance policies
and any modifications, extensions and/or assumption agreements and private
mortgage insurance policies relating to the Mortgage Loans by the Depositor to
the Trustee be, and be construed as, an absolute sale thereof to the Trustee. It
is, further, not the intention of the parties that such conveyance be deemed a
pledge thereof by the Depositor to the Trustee. However, in the event that,
notwithstanding the intent of the parties, such assets are held to be the
property of the Depositor, or if for any other reason this Agreement is held or
deemed to create a security interest in such assets, then (i) this Agreement
shall be deemed to be a security agreement within the meaning of the Uniform
Commercial Code of the State of New York and (ii) the conveyance provided for in
this Agreement shall be deemed to be an assignment and a grant by the Depositor
to the Trustee, for the benefit of the Certificateholders, of a security
interest in all of the assets that constitute the Trust Fund, whether now owned
or hereafter acquired.

      The Depositor for the benefit of the Certificateholders shall, to the
extent consistent with this Agreement, take such actions as may be necessary to
ensure that, if this Agreement were deemed to create a security interest in the
assets of the Trust Fund, such security interest would be deemed to be a
perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of the Agreement. The Depositor shall
arrange for filing any Uniform Commercial Code continuation statements in
connection with any security interest granted or assigned to the Trustee for the
benefit of the Certificateholders.

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      SECTION 10.05. Notices.

      (a)   The Trustee shall use its best efforts to promptly provide notice to
each Rating Agency and the NIMs Insurer with respect to each of the following of
which a Responsible Officer of the Trustee has actual knowledge:

            (i)   Any material change or amendment to this Agreement;

            (ii)  The occurrence of any Event of Default that has not been
      cured;

            (iii) The resignation or termination of the Trustee or the Servicer
      and the appointment of any successor;

            (iv)  The repurchase or substitution of Mortgage Loans pursuant to
      Sections 2.02, 2.03 and 3.12;

            (v)   The final payment to Certificateholders; and

            (vi)  Any change in the location of the Certificate Account or the
      Certificate Account.

      The Trustee shall promptly furnish or make available to each Rating Agency
copies of the following:

            (i)   Each report to Certificateholders described in Section 4.05;

            (ii)  Each annual statement as to compliance described in Section
      3.17; and

            (iii) Each annual independent public accountants' servicing report
      described in Section 3.18.

      (b)   All directions, demands and notices hereunder shall be in writing
and shall be deemed to have been duly given when delivered to (a) in the case of
the Depositor, Merrill Lynch Mortgage Investors, Inc., 250 Vesey Street, 4 World
Financial Center, 10th Floor, New York, New York 10080, Attention: Asset-Backed
Finance; (b) in the case of the Trustee, Wells Fargo Bank, N.A., P.O. Box 98,
Columbia, Maryland 21046, Attention: Client Manager -- MLMI Series 2004-HE1,
with a copy to Wells Fargo Bank, N.A., 9062 Old Annapolis Road, Columbia,
Maryland 21045, Attention: Client Manager -- MLMI Series 2004-HE1; (c) in the
case of the Rating Agencies, (i) Standard and Poor's Ratings Services, a
division of the McGraw Hill Companies, Inc., 55 Water Street, New York, New York
10041, (ii) Fitch, Inc., One State Street Plaza, New York, New York 10004; (d)
in the case of NIMs Insurer, an address to be specified; (e) in the case of the
Servicer, Litton Loan Servicing LP, 4828 Loop Central Drive, Houston, Texas
77081, Attention: Larry Litton, Sr.; and in the case of any of the foregoing
persons, such other addresses as may hereafter be furnished by any such persons
to the other parties to this Agreement. Notices to Certificateholders shall be
deemed given when mailed, first class postage prepaid, to their respective
addresses appearing in the Certificate Register.

      SECTION 10.06. Severability of Provisions.

      If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and

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shall in no way affect the validity or enforceability of the other provisions of
this Agreement or of the Certificates or the rights of the Holders thereof.

      SECTION 10.07. Assignment.

      Notwithstanding anything to the contrary contained herein, except as
provided pursuant to Section 6.02, this Agreement may not be assigned by the
Servicer without the prior written consent of the Trustee and Depositor.

      SECTION 10.08. Limitation on Rights of Certificateholders.

      The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the Trust Fund, nor entitle such Certificateholder's
legal representative or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a petition or winding up of the Trust
Fund, or otherwise affect the rights, obligations and liabilities of the parties
hereto or any of them.

      No Certificateholder shall have any right to vote (except as provided
herein) or in any manner otherwise control the operation and management of the
Trust Fund, or the obligations of the parties hereto, nor shall anything herein
set forth or contained in the terms of the Certificates be construed so as to
constitute the Certificateholders from time to time as partners or members of an
association; nor shall any Certificateholder be under any liability to any third
party by reason of any action taken by the parties to this Agreement pursuant to
any provision hereof.

      No Certificateholder shall have any right by virtue or by availing itself
of any provisions of this Agreement to institute any suit, action or proceeding
in equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of an Event
of Default and of the continuance thereof, as hereinbefore provided, the Holders
of Certificates evidencing not less than 25% of the Voting Rights evidenced by
the Certificates shall also have made written request to the Trustee to
institute such action, suit or proceeding in its own name as Trustee hereunder
and shall have offered to the Trustee such reasonable indemnity as it may
require against the costs, expenses, and liabilities to be incurred therein or
thereby, and the Trustee, for 60 days after its receipt of such notice, request
and offer of indemnity shall have neglected or refused to institute any such
action, suit or proceeding; it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Holders of any other of the Certificates and/or the NIMs
Insurer, or to obtain or seek to obtain priority over or preference to any other
such Holder and/or the NIMs Insurer or to enforce any right under this
Agreement, except in the manner herein provided and for the common benefit of
all Certificateholders. For the protection and enforcement of the provisions of
this Section 10.08, each and every Certificateholder and the Trustee shall be
entitled to such relief as can be given either at law or in equity.

      SECTION 10.09. Inspection and Audit Rights.

      The Servicer agrees that, on reasonable prior notice, it will permit any
representative of the NIMs Insurer, the Depositor or the Trustee during the
Servicer's normal business hours, to examine all the books of account, records,
reports and other papers of the Servicer relating to the Mortgage Loans, to make
copies and extracts therefrom, to cause such books to be audited by independent
certified public accountants selected by the NIMs Insurer, Depositor or the
Trustee and to discuss its affairs, finances and accounts relating to the
Mortgage Loans with its officers, employees, agents, counsel and independent
public accountants (and by this provision the Servicer hereby authorizes such
accountants to discuss with

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such representative such affairs, finances and accounts), all at such reasonable
times and as often as may be reasonably requested. Any out-of-pocket expense
incident to the exercise by the NIMs Insurer, Depositor or the Trustee of any
right under this Section 10.09 shall be borne by the party requesting such
inspection; all other such expenses shall be borne by the Servicer.

      SECTION 10.10. Certificates Nonassessable and Fully Paid.

      It is the intention of the Depositor that Certificateholders shall not be
personally liable for obligations of the Trust Fund, that the interests in the
Trust Fund represented by the Certificates shall be nonassessable for any reason
whatsoever, and that the Certificates, upon due authentication thereof by the
Trustee pursuant to this Agreement, are and shall be deemed fully paid.

      SECTION 10.11. Third Party Rights.

      The NIMs Insurer shall be deemed a third-party beneficiary of this
Agreement to the same extent as if it were a party hereto, and shall have the
right to enforce the provisions of this Agreement.

      SECTION 10.12. Additional Rights of the NIMs Insurer.

      (a)   Each party to this Agreement, any agent thereof and any successor
thereto shall furnish to the NIMs Insurer a copy of any notice, direction,
demand, opinion, schedule, list, certificate, report, statement, filing,
information, data or other communication provided by it or on its behalf to any
other Person pursuant to this Agreement at the same time, in the same form and
in the same manner as such communication is so provided and shall address or
cause such communication to be addressed to the NIMs Insurer in addition to any
other addressee thereof. The Servicer shall cause the NIMs Insurer to be an
addressee of any report furnished pursuant to this Agreement. With respect to
the Trustee, such obligation shall be satisfied with the provision of access to
the NIMs Insurer to the Trustee's website.

      (b)   Wherever in this Agreement there shall be a requirement that there
be no downgrade, reduction, withdrawal or qualification of or other effect on
the rating of any Class of Certificates by any Rating Agency as of any date,
there also shall be deemed to be a requirement that there be no such effect on
any class of notes issued pursuant to the Indenture and guaranteed by the NIMs
Insurer as of such date. In addition, unless there exists a continuance of any
failure by the NIMs Insurer to make a required payment under the policy insuring
the NIM Notes (such event, a "NIMs Insurer Default"), wherever in this Agreement
there shall be a requirement that any Person or any communication, object or
other matter be acceptable or satisfactory to or otherwise receive the consent
or other approval of any other Person (whether as a condition to the eligibility
of such Person to act in any capacity, as a condition to any circumstance or
state of affairs related to such matter, or otherwise), there also shall be
deemed to be a requirement that such Person or matter be approved in writing by
the NIMs Insurer, which approval shall not be unreasonably withheld or delayed.

      SECTION 10.13. Reserved.

      SECTION 10.14. Advance Facility.

      (a)   The Servicer is hereby authorized to enter into a financing or other
facility (any such arrangement, an "Advance Facility"), the documentation for
which complies with Section 10.14(e) below, under which (1) the Servicer assigns
or pledges its rights under this Agreement to be reimbursed for any or all
Advances and/or Servicing Advances to (i) a Person, which may be a
special-purpose bankruptcy-remote entity (an "SPV"), (ii) a Person, which may
simultaneously assign or pledge such rights to an SPV or (iii) a lender (a
"Lender"), which, in the case of any Person or SPV of the type described in
either of the preceding clauses (i) or (ii), may directly or through other
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assignees and/or pledgees, assign or pledge such rights to a Person, which may
include a trustee acting on behalf of holders of debt instruments (any such
Person or any such Lender, an "Advance Financing Person"), and/or (2) an Advance
Financing Person agrees to fund all of the Advances and/or Servicing Advances
required to be made by the Servicer pursuant to this Agreement. No consent of
the Trustee, Certificateholders or any other party shall be required before the
Servicer may enter into an Advance Facility nor shall the Trustee or the
Certificateholders be a third party beneficiary of any obligation of an Advance
Financing Person to the Servicer. Notwithstanding the existence of any Advance
Facility under which an Advance Financing Person agrees to fund Advances and/or
Servicing Advances, (A) the Servicer (i) shall remain obligated pursuant to this
Agreement to make Advances and/or Servicing Advances pursuant to and as required
by this Agreement and (ii) shall not be relieved of such obligations by virtue
of such Advance Facility and (B) neither the Advance Financing Person nor any
Servicer's Assignee (as hereinafter defined) shall have any right to proceed
against or otherwise contact any Mortgagor for the purpose of collecting any
payment that may be due with respect to any related Mortgage Loan or enforcing
any covenant of such Mortgagor under the related Mortgage Loan documents.

      (b)   If the Servicer enters into an Advance Facility, the Servicer and
the related Advance Financing Person shall deliver to the Trustee at the address
set forth in Section 10.05 hereof a written notice (an "Advance Facility
Notice"), stating (a) the identity of the Advance Financing Person, (b) the
identity of the Person (the "Servicer's Assignee") that will, subject to Section
10.14(c) hereof, have the right to make withdrawals from the Collection Account
pursuant to Section 3.08 hereof to reimburse previously unreimbursed Advances
and/or Servicing Advances ("Advance Reimbursement Amounts") and (c) that the
Servicer's Assignee shall agree to be bound by the provisions of this Section
10.14. The Advance Facility Notice shall be executed by the Servicer, the
Advance Financing Person and the Servicer's Assignee. Advance Reimbursement
Amounts (i) shall consist solely of amounts in respect of Advances and/or
Servicing Advances for which the Servicer would be permitted to reimburse itself
in accordance with Section 3.08 hereof, assuming the Servicer had made the
related Advance(s) and/or Servicing Advance(s) and (ii) shall not consist of
amounts payable to a successor Servicer in accordance with Section 3.08 hereof
to the extent permitted under Section 10.14(e) below.

      (c)   Notwithstanding the existence of an Advance Facility, the Servicer,
on behalf of the Advance Financing Person, shall be entitled to receive
reimbursements of Advances

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and/or Servicing Advances in accordance with Section 3.08 hereof, which
entitlement may be terminated by the Advance Financing Person pursuant to a
written notice to the Trustee in the manner set forth in Section 11.05 hereof.
Upon receipt of such written notice, the Servicer shall no longer be entitled to
receive reimbursement for any Advance Reimbursement Amounts and the Servicer's
Assignee shall immediately have the right to receive from the Collection Account
all Advance Reimbursement Amounts. Notwithstanding the foregoing, and for the
avoidance of doubt, (i) the Servicer and/or the Servicer's Assignee shall only
be entitled to reimbursement of Advance Reimbursement Amounts hereunder pursuant
to Section 3.08 of this Agreement and shall not otherwise be entitled to make
withdrawals of, or receive, Advance Reimbursement Amounts that shall be
deposited in the Collection Account pursuant to Section 3.05 hereof, and (ii)
none of the Trustee or the Certificateholders shall have any right to, or
otherwise be entitled to, receive any Advance Reimbursement Amounts to which the
Servicer or Servicer's Assignee, as applicable, shall be entitled pursuant to
Section 3.08 hereof. An Advance Facility may be terminated by the joint written
direction of the Servicer and the related Advance Financing Person. Written
notice of such termination shall be delivered to the Trustee in the manner set
forth in Section 10.05 hereof. Upon an Event of Default or if the Trustee
otherwise shall reasonably request, the Servicer shall maintain and provide to
any successor servicer or the Trustee as successor servicer a detailed
accounting on a loan-by-loan basis as to amounts advanced by, pledged or
assigned to, and reimbursed to any Advance Financing Person (and such successor
servicer or Trustee may rely on such information).

      (d)   [RESERVED].

      (e)   As between a predecessor Servicer and its Advance Financing Person,
on the one hand, and a successor Servicer and its Advance Financing Person, if
any, on the other hand, Advance Reimbursement Amounts on a loan-by-loan basis
with respect to each Mortgage Loan as to which an Advance and/or Servicing
Advance shall have been made and be outstanding shall be allocated on a
"first-in, first out" basis. In the event the Servicer's Assignee shall have
received some or all of an Advance Reimbursement Amount related to Advances
and/or Servicing Advances that were made by a Person other than such predecessor
Servicer or its related Advance Financing Person in error, then such Servicer's
Assignee shall be required to remit any portion of such Advance Reimbursement
Amount to each Person entitled to such portion of such Advance Reimbursement
Amount. Without limiting the generality of the foregoing, the Servicer shall
remain entitled to be reimbursed by the Advance Financing Person for all
Advances and/or Servicing Advances funded by the Servicer to the extent the
related Advance Reimbursement Amounts have not been assigned or pledged to such
Advance Financing Person or Servicer's Assignee.

      (f)   For purposes of any certification of a Servicing Officer of the
Servicer made pursuant to Section 4.01, any Nonrecoverable Advance or
Nonrecoverable Servicing Advance referred to therein may have been made by such
Servicer or any predecessor Servicer. In making its determination that any
Advance or Servicing Advance theretofore made has become a Nonrecoverable
Advance or Nonrecoverable Servicing Advance, the Servicer shall apply the same
criteria in making such determination regardless of whether such Advance or
Servicing Advance shall have been made by the Servicer or any predecessor
Servicer.

                                      114
<PAGE>
      (g)   The Trustee shall not, as a result of the existence of any Advance
Facility, have any additional duty or liability with respect to the payment of
any Advance Reimbursement Amount, have any additional responsibility to track or
monitor Advance Reimbursement Amounts or any Advance Facility, and, is not and
shall not be obligated to make any payment with respect to any Advance
Reimbursement Amount.

      (h)   None of the Depositor or the Trustee shall, as a result of the
existence of any Advance Facility, have any additional duty or liability with
respect to the calculation or payment of any Advance Reimbursement Amount, nor,
as a result of the existence of any Advance Facility, shall the Depositor or the
Trustee have any additional responsibility to track or monitor the
administration of the Advance Facility or the payment of Advance Reimbursement
Amounts to the Servicer's Assignee. The Servicer shall indemnify the Depositor,
the Trustee, any successor servicer and the Trust Fund for any claim, loss,
liability or damage resulting from any claim by the related Advance Financing
Person, except to the extent that such claim, loss, liability or damage resulted
from or arose out of negligence, recklessness or willful misconduct on the part
of the Depositor, the Trustee or any successor servicer, as the case may be, or
failure by the successor servicer or the Trustee, as the case may be, to remit
funds as required by this Agreement or the commission of an act or omission to
act by the successor servicer or the Trustee, as the case may be, and the
passage of any applicable cure or grace period, such that an Event of Default
under this Agreement occurs or such entity is subject to termination for cause
under this Agreement.

                                      115
<PAGE>

      IN WITNESS WHEREOF, the Depositor, the Servicer and the Trustee have
caused their names to be signed hereto by their respective officers thereunto
duly authorized as of the day and year first above written.

                                        MERRILL LYNCH MORTGAGE INVESTORS, INC.,
                                           as Depositor

                                        By:____________________________________
                                        Name:  Matthew Whalen
                                        Title: President

                                        LITTON LOAN SERVICING LP,
                                           as Servicer

                                        By:____________________________________
                                        Name:
                                        Title:

                                        WELLS FARGO BANK, N.A.,
                                         not in its individual capacity,
                                          but solely as Trustee

                                        By:____________________________________
                                        Name:  Sandra L. Whalen
                                        Title: Vice President

<PAGE>

                                    EXHIBIT A

                          FORMS OF OFFERED CERTIFICATES

                             [INTENTIONALLY OMITTED]

                                       A-1

<PAGE>

                                   EXHIBIT B-1

                             MORTGAGE LOAN SCHEDULE

                             [INTENTIONALLY OMITTED]

                                      B-1-1
<PAGE>

                                   EXHIBIT B-2

                         GROUP A MORTGAGE LOAN SCHEDULE

                             [INTENTIONALLY OMITTED]

                                      B-2-1
<PAGE>

                                   EXHIBIT B-3

                         GROUP B MORTGAGE LOAN SCHEDULE

                             [INTENTIONALLY OMITTED]

                                      B-3-1
<PAGE>

                                    EXHIBIT C

                                   [RESERVED]

                                       C-1

<PAGE>

                                    EXHIBIT D

                          FORM OF TRUSTEE CERTIFICATION

                                     [DATE]

Merrill Lynch Mortgage Investors, Inc.
250 Vesey Street
4 World Financial Center, 10th Floor
New York, New York 10080

Litton Loan Servicing LP
4282 Loop Central Drive
Houston, Texas  77018

Re:   Pooling and Servicing Agreement dated as of July 1, 2004 among Merrill
      Lynch Mortgage Investors, Inc., as depositor, Litton Loan Servicing LP, as
      servicer and Wells Fargo Bank, N.A., as trustee, Merrill Lynch Mortgage
      Investors Trust, Mortgage Loan Asset-Backed Certificates, Series 2004-HE1

Ladies and Gentlemen:

      In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that [,
except as set forth in Schedule A hereto,] as to each Mortgage Loan listed in
the Mortgage Loan Schedule attached hereto (other than any Mortgage Loan paid in
full or listed on the attachment hereto) it has reviewed the Mortgage File and
the Mortgage Loan Schedule and has determined that:

      (i)   All documents in the Mortgage File required to be delivered to the
Trustee pursuant to Section 2.01 of the Pooling and Servicing Agreement are in
its possession;

      (ii)  In connection with each Mortgage Loan or Assignment thereof as to
which documentary evidence of recording was not received on the Closing Date, it
has received evidence of such recording; and

      (iii) Such documents have been reviewed by it and such documents do
not contain any material omissions or defects within the meaning of Section 2.01
or 2.02.

      The Trustee has made no independent examination of any documents contained
in each Mortgage File beyond confirming (i) that the Mortgage Loan number and
the name of the Mortgagor in each Mortgage File conform to the respective
Mortgage Loan number and name listed on the Mortgage Loan Schedule and (ii) the
existence in each Mortgage File of each of the documents listed in subparagraphs
(i)(A) through (G), inclusive, of Section 2.01 in the Agreement. The Trustee
makes no representations or warranties as to the validity, legality,
recordability, sufficiency, enforceability or genuineness of any of the
documents contained in each Mortgage Loan or the collectibility, insurability,
effectiveness or suitability of any such Mortgage Loan.

                                      D-1
<PAGE>

      Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.

                                            WELLS FARGO BANK, N.A.,
                                            as Trustee

                                            By: ________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                      D-2
<PAGE>

                                   EXHIBIT E-1

                           FORM OF TRANSFEREE'S LETTER
       MERRILL LYNCH MORTGAGE INVESTORS TRUST, MORTGAGE LOAN ASSET-BACKED
                         CERTIFICATES, SERIES 2004-HE1

                                     [DATE]

Wells Fargo Bank, N.A.
9062 Old Annapolis Road
Columbia, Maryland   21045
Attention:  Corporate Trust Services - MLMI 2004-HE1

Ladies and Gentlemen:

       We propose to purchase Merrill Lynch Mortgage Investors Trust, Mortgage
Loan Asset-Backed Certificates, Series 2004-HE1, [Class R/Class R-X], described
in the Prospectus Supplement, dated July 20, 2004, and Prospectus, dated June
18, 2004.

      1.    We certify that (a) we are not a disqualified organization and (b)
we are not purchasing such [Class R/Class R-X] Certificate on behalf of a
disqualified organization; for this purpose the term "disqualified organization"
means the United States, any state or political subdivision thereof, any foreign
government, any international organization, any agency or instrumentality of any
of the foregoing (except any entity treated as other than an instrumentality of
the foregoing for purposes of Section 168(h)(2)(D) of the Internal Revenue Code
of 1986, as amended (the "Code")), any organization (other than a cooperative
described in Section 521 of the Code) that is exempt from taxation under the
Code (unless such organization is subject to tax on excess inclusions) and any
organization that is described in Section 1381(a)(2)(C) of the Code. We
understand that any breach by us of this certification may cause us to be liable
for an excise tax imposed upon transfers to disqualified organizations.

      2.    We certify that (a) we have historically paid our debts as they
became due, (b) we intend, and believe that we will be able, to continue to pay
our debts as they become due in the future, (c) we understand that, as
beneficial owner of the [Class R/Class R-X] Certificate, we may incur tax
liabilities in excess of any cash flows generated by the [Class R/Class R-X]
Certificate, and (d) we intend to pay any taxes associated with holding the
[Class R/Class R-X] Certificate as they become due and (e) we will not cause
income from the [Class R/Class R-X] Certificate to be attributable to a foreign
permanent establishment or fixed base (within the meaning of an applicable
income tax treaty) of ours or another U.S. taxpayer.

      3.    We acknowledge that we will be the beneficial owner of the [Class
R/Class R-X] Certificate and:(1)

            ______ The [Class R/Class R-X] Certificate will be registered in our
                  name.

----------

(1)   Check appropriate box and if necessary fill in the name of the Transfee's
      nominee

                                     E-1-1
<PAGE>

            ______ The [Class R/Class R-X] Certificate will be held in the name
            of our nominee, _________________, which is not a disqualified
            organization.

      4.    We certify that we are not an employee benefit plan subject to Title
I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
or a plan within the meaning of Section 4975 of the Code or a plan subject to
federal, state or local law substantively similar to the foregoing provisions of
ERISA or the Code (each, a "Plan"), and are not directly or indirectly acquiring
the [Class R/Class R-X] Certificate for, on behalf of, or with any assets of any
such Plan.

      5.    We certify that (i) we are a U.S. person or (ii) we will hold the
[Class R/Class R-X] Certificate in connection with the conduct of a trade or
business within the United States and have furnished the transferor, the Trustee
and the Trustee with a duly completed and effective Internal Revenue Service
Form W-8ECI or successor form at the time and in the manner required by the
Code; for this purpose the term "U.S. person" means a citizen or resident of the
United States, a corporation, or partnership (unless, in the case of a
partnership, Treasury regulations are adopted that provide otherwise) created or
organized in or under the laws of the United States, any State thereof or the
District of Columbia, including an entity treated as a corporation or
partnership for federal income tax purposes, an estate whose income is subject
to United States federal income tax regardless of the source of its income, or a
trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more such U.S.
persons have the authority to control all substantial decisions of the trust
(or, to the extent provided in applicable Treasury regulations, certain trusts
in existence on August 20, 1996 which are eligible to elect to be treated as
U.S. Persons). We agree that any breach by us of this certification shall render
the transfer of any interest in the [Class R/Class R-X] Certificate to us
absolutely null and void and shall cause no rights in the [Class R/Class R-X]
Certificate to vest in us.

      6.    We agree that in the event that at some future time we wish to
transfer any interest in the [Class R/Class R-X] Certificate, we will transfer
such interest in the [Class R/Class R-X] Certificate only (a) to a transferee
that (i) is not a disqualified organization and is not purchasing such interest
in the [Class R/Class R-X] Certificate on behalf of a disqualified organization,
(ii) is a U.S. person or will hold the [Class R/Class R-X] Certificate in
connection with the conduct of a trade or business within the United States and
will furnish us, the Trustee and the Trustee with a duly completed and effective
Internal Revenue Service Form W-8ECI or successor form at the time and in the
manner required by the Code and (iii) has delivered to the Trustee and the
Trustee a letter in the form of this letter (including the affidavit appended
hereto) and, we will provide the Trustee and the Trustee a written statement
substantially in the form of Exhibit E-2 to the Agreement.

                                     E-1-2
<PAGE>

      7.    We hereby designate _______________________ as our fiduciary to act
as the tax matters person for each of the REMICs provided for in the Agreement
in which the [Class R/Class R-X] Certificate represents the residual interest.

                                               Very truly yours,
                                               [PURCHASER]

                                               By: _____________________________
                                                   Name:
                                                   Title:

Accepted as of __________ __, 200__
MERRILL LYNCH MORTGAGE INVESTORS, INC.

By: ____________________________
    Name:
    Title:

                                     E-1-3
<PAGE>

                                   APPENDIX A

                        Affidavit pursuant to (i) Section 860E(e)(4) of the
                        Internal Revenue Code of 1986, as amended, and (ii)
                        certain provisions of the Pooling and Servicing
                        Agreement

Under penalties of perjury, the undersigned declares that the following is true:

(1)   He or she is an officer of _________________________ (the "Transferee"),

(2)   the Transferee's Employer Identification number is __________,

(3)   the Transferee is not a "disqualified organization" (as defined below),
      has no plan or intention of becoming a disqualified organization, and is
      not acquiring any of its interest in the Merrill Lynch Mortgage Investors
      Trust, Mortgage Loan Asset-Backed Certificates, Series 2004-HE1, [Class
      R/Class R-X] on behalf of a disqualified organization or any other entity,

(4)   unless Merrill Lynch Mortgage Investors, ("MLMI") has consented to the
      transfer to the Transferee by executing the form of Consent affixed as
      Appendix B to the Transferee's Letter to which this Certificate is affixed
      as Appendix A, the Transferee is a "U.S. person" (as defined below),

(5)   that no purpose of the transfer is to avoid or impede the assessment or
      collection of tax,

(6)   the Transferee has historically paid its debts as they became due,

(7)   the Transferee intends, and believes that it will be able, to continue to
      pay its debts as they become due in the future,

(8)   the Transferee understands that, as beneficial owner of the [Class R/Class
      R-X] Certificate, it may incur tax liabilities in excess of any cash flows
      generated by the [Class R/Class R-X] Certificate,

(9)   the Transferee intends to pay any taxes associated with holding the [Class
      R/Class R-X] Certificate as they become due,

(10)  the Transferee consents to any amendment of the Pooling and Servicing
      Agreement that shall be deemed necessary by MLMI (upon advice of counsel)
      to constitute a reasonable arrangement to ensure that the [Class R/Class
      R-X] Certificate will not be owned directly or indirectly by a
      disqualified organization, and

(11)  IF BRACKETED, THE FOLLOWING CERTIFICATIONS ARE INAPPLICABLE [the transfer
      is not a direct or indirect transfer of the [Class R/Class R-X]
      Certificate to a foreign permanent establishment or fixed base (within the
      meaning of an applicable income tax treaty) of the Transferee, and as to
      each of the residual interests represented by the [Class R/Class R-X]
      Certificate, the present value of the anticipated tax liabilities
      associated with holding such residual interest does not exceed the sum of:

      (A)   the present value of any consideration given to the Transferee to
            acquire such residual interest;

                                     E-1-4
<PAGE>

      (B)   the present value of the expected future distributions on such
            residual interest; and

      (C)   the present value of the anticipated tax savings associated with
            holding such residual interest as the related REMIC generates
            losses.

      For purposes of this declaration, (i) the Transferee is assumed to pay tax
      at a rate equal to the highest rate of tax specified in Section 11(b)(1)
      of the Code, but the tax rate specified in Section 55(b)(1)(B) of the Code
      may be used in lieu of the highest rate specified in Section 11(b)(1) of
      the Code if the Transferee has been subject to the alternative minimum tax
      under Section 55 of the Code in the preceding two years and will compute
      its taxable income in the current taxable year using the alternative
      minimum tax rate, and (ii) present values are computed using a discount
      rate equal to the Federal short-term rate prescribed by Section 1274(d) of
      the Code for the month of the transfer and the compounding period used by
      the Transferee;]

[(11) (A)   at the time of the transfer, and at the close of each of the
            Transferee's two fiscal years preceding the Transferee's
            fiscal year of transfer, the Transferee's gross assets for
            financial reporting purposes exceed $100 million and its net
            assets for financial reporting purposes exceed $10 million;
            and

      (B)   the Transferee is an eligible corporation as defined in Treasury
            regulations Section 1.860E-1(c)(6)(i) and has agreed in writing that
            any subsequent transfer of the Class R Certificate will be to
            another eligible corporation in a transaction that satisfies
            Treasury regulation Sections 1.860E-1(c)(4)(i), 1.860E-1(c)(4)(ii),
            1.860E-1(c)(4)(iii) and 1.860E-1(c)(5) and such transfer will not be
            a direct or indirect transfer to a foreign permanent establishment
            (within the meaning of an applicable income tax treaty) of a
            domestic corporation.

For purposes of this declaration, the gross and net assets of the Transferee do
not include any obligation of any related person as defined in Treasury
regulation Section 1.860E-1(c)(6)(ii) or any other asset if a principal purpose
for holding or acquiring the other asset is to permit the Transferee to make
this declaration or to satisfy the requirements of Treasury regulation Section
1.860E-1(c)(5)(i).]

(12) The Transferee will not cause income from the [Class R/Class R-X]
Certificate to be attributable to a foreign permanent establishment or fixed
base (within the meaning of an applicable income tax treaty) of the Transferee
or another U.S. taxpayer.

                                     E-1-5

<PAGE>

For purpose of this affidavit, the term "disqualified organization" means the
United States, any state or political subdivision thereof, any foreign
government, any international organization, any agency or instrumentality of any
of the foregoing (except any entity treated as other than an instrumentality of
the foregoing for purposes of Section 168(h)(2)(D) of the Internal Revenue Code
of 1986, as amended (the "Code")), any organization (other than a cooperative
described in Section 521 of the Code) that is exempt from taxation under the
Code (unless such organization is subject to tax on excess inclusions) and any
organization that is described in Section 1381(a)(2)(C) of the Code and the term
"U.S. Person" means a citizen or resident of the United States, a corporation or
partnership (unless, in the case of a partnership, Treasury regulations are
adopted that provide otherwise) created or organized in or under the laws of the
United States, any state thereof or the District of Columbia, including an
entity treated as a corporation or partnership for federal income tax purposes,
an estate whose income is subject to Unites States federal income tax regardless
of its source, or a trust if a court within the United States is able to
exercise primary supervision over the administration of such trust, and one or
more such U.S. Persons have the authority to control all substantial decisions
of such trust, (or, to the extent provided in applicable Treasury regulations,
certain trusts in existence on August 20, 1996 which are eligible to elect to be
treated as U.S. Persons).

__________________________________
By: ______________________________

__________________________________
      Address of Investor for receipt of distribution:

      Address of Investor for receipt of tax information:
     (Corporate Seal)
      Attest:

__________________________________
__________________________________, Secretary

                                     E-1-6
<PAGE>

      Personally appeared before me the above-named ______________, known or
      proved to me to be the same person who executed the foregoing instrument
      and to be the _______ of the Investor, and acknowledged to me that he
      executed the same as his free act and deed and the free act and deed of
      the Investor.

      Subscribed and sworn before me this    day of

            , 200_ .

_______________________________

      Notary Public

      County of ___________________
      State of _____________________

      My commission expires the ________ day of ______________

                                             By: _____________________________
                                                 Name:   _____________________
                                                 Title:  _____________________

Dated: _____________

                                     E-1-7
<PAGE>

                                   EXHIBIT E-2
                         FORM OF TRANSFEROR'S AFFIDAVIT
       MERRILL LYNCH MORTGAGE INVESTORS TRUST, MORTGAGE LOAN ASSET-BACKED
                         CERTIFICATES, SERIES 2004-HE1

                                     [DATE]

Wells Fargo Bank, N.A.
9062 Old Annapolis Road
Columbia, Maryland  21045
Attention:  Corporate Trust Services - MLMI 2004-HE1

Re:   Merrill Lynch Mortgage Investors Trust, Mortgage Loan Asset-Backed
      Certificates, Series 2004-HE1

_______________________ (the "Transferor") has reviewed the attached affidavit
of _____________________________ (the "Transferee"), and has no actual knowledge
that such affidavit is not true, and has no reason to believe that the
Transferee has the intention to impede the assessment or collection of any
federal, state or local taxes legally required to be paid with respect to the
[Class R/Class R-X] Certificate referred to in the attached affidavit. In
addition, the Transferor has conducted a reasonable investigation at the time of
the transfer and found that the Transferee had historically paid its debts as
they came due and found no significant evidence to indicate that the Transferee
will not continue to pay its debts as they become due.

                                                Very truly yours,
                                                --------------------------------
                                                Name:
                                                Title:

                                    E-2-1
<PAGE>

                                    EXHIBIT F

                       FORM OF TRANSFEROR CERTIFICATE FOR
                        CLASS P AND CLASS C CERTIFICATES

Wells Fargo Bank, N.A.
9062 Old Annapolis Road
Columbia, Maryland  21045
Attention:  Corporate Trust Services - MLMI 2004-HE1

RE:   Merrill Lynch Mortgage Investors Trust, Mortgage Loan Asset-Backed
      Certificates, Series 2004-HE1

Ladies and Gentlemen:

      In connection with our disposition of the Class [C or P] Certificate, we
certify that (a) we understand that the Certificates have not been registered
under the Securities Act of 1933, as amended (the "Act"), and are being disposed
by us in a transaction that is exempt from the registration requirements of the
Act, (b) we have not offered or sold any Certificates to, or solicited offers to
buy any Certificates from, any person, or otherwise approached or negotiated
with any person with respect thereto, in a manner that would be deemed, or taken
any other action that would result in, a violation of Section 5 of the Act and
(c) if we are disposing of a Class [C or P] Certificate, we have no knowledge
the Transferee is not a Permitted Transferee. All capitalized terms used herein
but not defined herein shall have the meanings assigned to them in the Pooling
and Servicing Agreement dated as of July 1, 2004, among Merrill Lynch Mortgage,
Inc., as depositor, Litton Loan Servicing LP, as servicer and Wells Fargo Bank,
N.A., as trustee.

                                               Very truly yours,

                                               _________________________________
                                               Name of Transferor

                                               By: ___________________________
                                               Name:
                                               Title

                                      F-1
<PAGE>

                                    EXHIBIT G

                            FORM OF INVESTMENT LETTER
                              (ACCREDITED INVESTOR)

                                     [DATE]

Wells Fargo Bank, N.A.
9062 Old Annapolis Road
Columbia, Maryland  21045
Attention:  Corporate Trust Services - MLMI 2004-HE1

Re:   Pooling and Servicing Agreement dated as of July 1, 2004 among Merrill
      Lynch Mortgage Investors, Inc., as depositor, Litton Loan Servicing LP, as
      servicer and Wells Fargo Bank, N.A., as trustee, Merrill Lynch Mortgage
      Investors Trust, Mortgage Loan Asset-Backed Certificates, Series 2004-HE1
      [CLASS B-1, B-2, B-3, C OR P]

Ladies and Gentlemen:

      ______________ (the "Purchaser") intends to purchase from ________________
(the "Transferor") $_______ by original principal balance (the "Transferred
Certificates") of Mortgage Loan Asset-Backed Certificates, Series 2004-HE1,
[CLASS B-1, B-2, B-3, C OR P] (the "Certificates"), issued pursuant to a Pooling
and Servicing Agreement, dated as of July 1, 2004 (the "Pooling and Servicing
Agreement"), among Merrill Lynch Mortgage Investors, Inc., as depositor (the
"Depositor"), Litton Loan Servicing LP, as servicer (the "Servicer") and Wells
Fargo Bank, N.A., as trustee (the "Trustee"). [THE PURCHASER INTENDS TO REGISTER
THE TRANSFERRED CERTIFICATE IN THE NAME OF ____________________, AS NOMINEE FOR
_________________.] All terms used and not otherwise defined herein shall have
the meanings set forth in the Pooling and Servicing Agreement.

      For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Purchaser certifies, represents and warrants to, and
covenants with, the Depositor and the Trustee that:

      1. The Purchaser understands that (a) the Certificates have not been
registered or qualified under the Securities Act of 1933, as amended (the
"Securities Act"), or the securities laws of any state, (b) neither the
Depositor nor the Trustee is required, and neither of them intends, to so
register or qualify the Certificates, (c) the Certificates cannot be resold
unless (i) they are registered and qualified under the Securities Act and the
applicable state securities laws or (ii) an exemption from registration and
qualification is available and (d) the Pooling and Servicing Agreement contains
restrictions regarding the transfer of the Certificates.

      2. The Certificates will bear a legend to the following effect:

      THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
      AS AMENDED (THE "ACT"), THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED
      (THE "1940 ACT") OR ANY STATE SECURITIES OR "BLUE SKY" LAWS, AND MAY NOT,
      DIRECTLY OR INDIRECTLY, BE SOLD OR OTHERWISE TRANSFERRED, OR OFFERED FOR
      SALE, UNLESS SUCH TRANSFER IS NOT SUBJECT TO REGISTRATION UNDER THE ACT,
      THE 1940 ACT AND ANY APPLICABLE STATE

                                       G-1
<PAGE>

      SECURITIES LAWS AND SUCH TRANSFER ALSO COMPLIES WITH THE OTHER PROVISIONS
      OF SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT. NO TRANSFER OF
      THIS CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE SHALL HAVE RECEIVED, IN
      FORM AND SUBSTANCE SATISFACTORY TO THE SERVICER (A) AN INVESTMENT LETTER
      FROM THE PROSPECTIVE INVESTOR; AND (B) REPRESENTATIONS FROM THE TRANSFEROR
      REGARDING THE OFFERING AND SALE OF THE CERTIFICATES.

      [IN THE CASE OF THE CLASS C OR P CERTIFICATE ONLY]

      NO TRANSFER OF THIS CERTIFICATE SHALL BE REGISTERED UNLESS THE PROSPECTIVE
      TRANSFEREE PROVIDES THE TRUSTEE AND THE DEPOSITOR WITH (A) A
      REPRESENTATION THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN
      SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974,
      AS AMENDED ("ERISA") OR A PLAN SUBJECT TO SECTION 4975 OF THE INTERNAL
      REVENUE CODE OF 1986, AS AMENDED (THE "CODE") OR A PLAN SUBJECT TO STATE,
      LOCAL OR OTHER FEDERAL LAW SUBSTANTIVELY SIMILAR TO THE FOREGOING
      PROVISIONS OF ERISA OR THE CODE ("SIMILAR LAW") (COLLECTIVELY, "PLAN"),
      AND IS NOT DIRECTLY OR INDIRECTLY ACQUIRING THIS CERTIFICATE BY, ON BEHALF
      OF, OR WITH ANY ASSETS OF ANY SUCH PLAN, (B) IF THE CERTIFICATE HAS BEEN
      THE SUBJECT OF AN ERISA-QUALIFYING UNDERWRITING, A REPRESENTATION THAT
      SUCH TRANSFEREE IS AN INSURANCE COMPANY THAT IS ACQUIRING THE CERTIFICATE
      WITH ASSETS OF AN "INSURANCE COMPANY GENERAL ACCOUNT" AS DEFINED IN
      SECTION V(E) OF PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE") 95-60 AND
      THE ACQUISITION AND HOLDING OF THE CERTIFICATE ARE COVERED AND EXEMPT
      UNDER SECTIONS I AND III OF PTCE 95-60 OR (C) SOLELY IN THE CASE OF A
      DEFINITIVE CERTIFICATE, AN OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE,
      AND UPON WHICH THE TRUSTEE SHALL BE ENTITLED TO RELY, TO THE EFFECT THAT
      THE ACQUISITION AND HOLDING OF SUCH CERTIFICATE BY THE PROSPECTIVE
      TRANSFEREE WILL NOT CONSTITUTE OR RESULT IN A NONEXEMPT PROHIBITED
      TRANSACTION UNDER ERISA OR THE CODE OR A VIOLATION OF SIMILAR LAW AND WILL
      NOT SUBJECT THE TRUSTEE, THE SERVICER OR THE DEPOSITOR TO ANY OBLIGATION
      IN ADDITION TO THOSE UNDERTAKEN BY SUCH ENTITIES IN THE TRUST AGREEMENT,
      WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF THE TRUSTEE, THE
      SERVICER OR THE DEPOSITOR.

      3. The Purchaser is acquiring the Transferred Certificates for its own
account [FOR INVESTMENT ONLY]**/ and not with a view to or for sale or other
transfer in connection with any distribution of the Transferred Certificates in
any manner that would violate the Securities Act or any applicable state
securities laws, subject, nevertheless, to the understanding that disposition of
the Purchaser's property shall at all times be and remain within its control.

      4. The Purchaser (a) is a substantial, sophisticated institutional
investor having such knowledge and experience in financial and business matters,
and in particular in such matters related to securities similar to the
Certificates, such that it is capable of evaluating the merits and risks of
investment

--------------------
**Not required of a broker/dealer purchasser

                                       G-2
<PAGE>

in the Certificates, (b) is able to bear the economic risks of such
an investment and (c) is an "accredited investor" within the meaning of Rule
501(a) promulgated pursuant to the Securities Act.

      5. The Purchaser will not nor has it authorized nor will it authorize any
person to (a) offer, pledge, sell, dispose of or otherwise transfer any
Certificate, any interest in any Certificate or any other similar security to
any person in any manner, (b) solicit any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c)
otherwise approach or negotiate with respect to any Certificate, any interest in
any Certificate or any other similar security with any person in any manner, (d)
make any general solicitation by means of general advertising or in any other
manner, or (e) take any other action, that would constitute a distribution of
any Certificate under the Securities Act or the Investment Company Act of 1940,
as amended (the "1940 Act"), that would render the disposition of any
Certificate a violation of Section 5 of the Securities Act or any state
securities law, or that would require registration or qualification pursuant
thereto. Neither the Purchaser nor anyone acting on its behalf has offered the
Certificates for sale or made any general solicitation by means of general
advertising or in any other manner with respect to the Certificates. The
Purchaser will not sell or otherwise transfer any of the Certificates, except in
compliance with the provisions of the Pooling and Servicing Agreement.

      6. The Purchaser shall provide the Trustee and the Depositor with (A) a
representation that it is not an employee benefit plan subject to Title I of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") or a plan
subject to Section 4975 of the Internal Revenue Code of 1986 (the "Code), or a
plan subject to state, local or other federal law substantively similar to the
foregoing provisions of ERISA or the code ("Similar Law") (collectively,
"Plan"), and is not directly or indirectly acquiring the Certificates by, on
behalf of, or with any assets of any such Plan, (B) if the Certificates have
been the subject of an ERISA-qualifying underwriting, a representation that it
is an insurance company that is acquiring the Certificates with assets of an
"insurance company general account" as defined in Section V(e) of Prohibited
Transaction Class Exemption ("PTCE") 95-60 and the acquisition and holding of
the Certificates are covered and exempt under Sections I and III of PTCE 95-60
or (C) solely in the case of Definitive Certificates, it delivers herewith an
Opinion of Counsel satisfactory to the Trustee, and upon which the Trustee shall
be entitled to rely, to the effect that the acquisition and holding of such
Certificates by the prospective transferee will not constitute or result in a
nonexempt prohibited transaction under ERISA or the Code or a violation of
Similar Law and will not subject the Trustee, the Servicer or the Depositor to
any obligation in addition to those undertaken by such entities in the Pooling
and Servicing Agreement, which Opinion of Counsel shall not be an expense of the
Trustee, the Servicer or the Depositor.

      7. Prior to the sale or transfer by the Purchaser of any of the
Certificates, the Purchaser will obtain from any subsequent purchaser
substantially the same certifications, representations, warranties and covenants
contained in the foregoing paragraphs and in this letter or a letter
substantially in the form of Exhibit [H] to the Pooling and Servicing Agreement.

      8. The Purchaser agrees to indemnify the Trustee, the Servicer and the
Depositor against any liability that may result from any misrepresentation made
herein.

                                Very truly yours,

                                [PURCHASER]

                                By: _______________________________
                                    Name:
                                    Title

                                      G-3
<PAGE>

                                    EXHIBIT H

                       FORM OF RULE 144A INVESTMENT LETTER
                         (QUALIFIED INSTITUTIONAL BUYER)

                                     [DATE]

Wells Fargo Bank, N.A.
9062 Old Annapolis Road
Columbia, Maryland  21045
Attention:  Corporate Trust Services - MLMI 2004-HE1

Re:   Pooling and Servicing Agreement dated as of July 1, 2004 among Merrill
      Lynch Mortgage Investors, Inc., as depositor, Litton Loan Servicing LP, as
      servicer and Wells Fargo Bank, N.A., as trustee, Merrill Lynch Mortgage
      Investors Trust, Mortgage Loan Asset-Backed Certificates, Series 2004-HE1
      [CLASS B-1, B-2, B-3, C OR P]

Ladies and Gentlemen:

      ______________ (the "Purchaser") intends to purchase from ________________
(the "Transferor") $_______ by original principal balance (the "Transferred
Certificates") of Mortgage Loan Asset-Backed Certificates, Series 2004-HE1,
[CLASS B-1, B-2, B-3, C OR P] (the "Certificates"), issued pursuant to a Pooling
and Servicing Agreement, dated as of July 1, 2004 (the "Pooling and Servicing
Agreement"), among Merrill Lynch Mortgage Investors, Inc., as depositor (the
"Depositor"), Litton Loan Servicing LP, as servicer (the "Servicer"), and Wells
Fargo Bank, N.A., as trustee (the "Trustee"). [THE PURCHASER INTENDS TO REGISTER
THE TRANSFERRED CERTIFICATE IN THE NAME OF ____________________, AS NOMINEE FOR
__________________.] All terms used and not otherwise defined herein shall have
the meanings set forth in the Pooling and Servicing Agreement.

      For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Purchaser certifies, represents and warrants to, and
covenants with, the Depositor and the Trustee that:

      In connection with our acquisition of the above Transferred Certificates
we certify that (a) we understand that the Certificates are not being registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities laws and are being transferred to us in a transaction that is exempt
from the registration requirements of the Act and any such laws, (b) we have
such knowledge and experience in financial and business matters that we are
capable of evaluating the merits and risks of investments in the Certificates,
(c) we have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Transferred Certificates and all
matters relating thereto or any additional information deemed necessary to our
decision to purchase the Transferred Certificates, (d)(A) we are not an employee
benefit plan subject to Title I of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), a plan subject to Section 4975 of the Internal
Revenue Code of 1986, as amended (the "Code"), a plan subject to any state,
local or other federal law substantively similar to the foregoing provisions of
ERISA or the Code ("Similar Law") (collectively, "Plan"), and are not directly
or indirectly acquiring this Certificate by, on behalf of, or with any assets of
any such Plan or (B) if the Certificate has been the subject of an
ERISA-Qualifying Underwriting, we are an insurance company that is acquiring the
Certificate with funds contained in an "insurance company general account," as
defined in Section

                                       H-1
<PAGE>

V(e) of Prohibited Transaction Class Exemption ("PTCE") 95-60, and the
acquisition and holding of the Certificate are covered and exempt under Sections
I and III of PTCE 95-60, or (C) solely in the event the Certificate is a
Definitive Certificate, we will herewith deliver an Opinion of Counsel
satisfactory to the Trustee, and upon which the Trustee shall be entitled to
rely, to the effect that the acquisition and holding of the Certificate will not
constitute or result in a nonexempt prohibited transaction under ERISA or the
Code, or a violation of Similar Law, and will not subject the Trustee, the
Servicer or the Depositor to any obligation in addition to those expressly
undertaken in the Pooling and Servicing Agreement, which Opinion of Counsel
shall not be an expense of the Trustee, the Servicer or the Depositor, (e) we
have not, nor has anyone acting on our behalf offered, transferred, pledged,
sold or otherwise disposed of the Certificates, any interest in the Certificates
or any other similar security to, or solicited any offer to buy or accept a
transfer, pledge or other disposition of the Certificates, any interest in the
Certificates or any other similar security from, or otherwise approached or
negotiated with respect to the Certificates, any interest in the Certificates or
any other similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or taken
any other action, that would constitute a distribution of the Certificates under
the Securities Act or that would render the disposition of the Certificates a
violation of Section 5 of the Securities Act or require registration pursuant
thereto, nor will act, nor has authorized or will authorize any person to act,
in such manner with respect to the Certificates, (f) we are a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act and have completed one of the forms of certification to that effect attached
hereto as Annex 1 or Annex 2. We are aware that the sale of the Transferred
Certificates to us is being made in reliance on Rule 144A. We are acquiring the
Transferred Certificates for our own account or for resale pursuant to Rule 144A
and further understand that such Certificates may be resold, pledged or
transferred only (i) to a person reasonably believed by us, based upon
certifications of such purchaser or information we have in our possession, to be
a qualified institutional buyer that purchases for its own account or for the
account of a qualified institutional buyer to whom notice is given that the
resale, pledge or transfer is being made in reliance on Rule 144A, or (ii)
pursuant to another exemption from registration under the Securities Act.

      We agree to indemnify the Trustee, the Servicer and the Depositor against
any liability that may result from any misrepresentation made herein.

                                                Very truly yours,

                                                [PURCHASER]

                                                By: ____________________________
                                                    Name:
                                                    Title:

                                      H-2
<PAGE>

                                                                         ANNEX 1

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

          [FOR TRANSFEREES OTHER THAN REGISTERED INVESTMENT COMPANIES]

      The undersigned (the "Buyer") hereby certifies as follows to the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates with respect to the Certificates described therein:

      1. As indicated below, the undersigned is the President, Chief Financial
Officer, Senior Vice President or other executive officer of the Buyer.

      2. In connection with the purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned
and/or invested on a discretionary basis $____________* in securities (except
for the excluded securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance with Rule 144A)
and (ii) the Buyer satisfies the criteria in the category marked below.

            ____  Savings and Loan. The Buyer (a) is a savings and loan
                  association, building and loan association, cooperative bank,
                  homestead association or similar institution, which is
                  supervised and examined by a State or Federal authority having
                  supervision over such institution or is a foreign savings and
                  loan association or equivalent institution and (b) has an
                  audited net worth of at least $25,000,000 as demonstrated in
                  its latest annual financial statements, a copy of which is
                  attached hereto.

            ____  Broker-dealer. The Buyer is a dealer registered pursuant to
                  Section 15 of the Securities Exchange Act of 1934, as amended.

            ____  Insurance Company. The Buyer is an insurance company whose
                  primary and predominant business activity is the writing of
                  insurance or the reinsuring of risks underwritten by insurance
                  companies and which is subject to supervision by the insurance
                  commissioner or a similar official or agency of the State,
                  territory or the District of Columbia.

            ____  State or Local Plan. The Buyer is a plan established and
                  maintained by a State, its political subdivisions, or any
                  agency or instrumentality of the State or its political
                  subdivisions, for the benefit of its employees.

            ____  ERISA Plan. The Buyer is an employee benefit plan subject to
                  Title I of the Employee Retirement Income Security Act of
                  1974, as amended.

            ____  Investment Advisor. The Buyer is an investment advisor
                  registered under the Investment Advisors Act of 1940, as
                  amended.

---------------------
* Buyer must own and/or invest on a discretionary basis at least $100,000,000 in
securities unless Buyer is a dealer, and, in that case, Buyer must own and/or
invest on a discretionary basis at least $10,000,000 in securities

                                      H-3
<PAGE>

            ____  Small Business Investment Company. Buyer is a small business
                  investment company licensed by the U.S. Small Business
                  Administration under Section 301(c) or (d) of the Small
                  Business Investment Act of 1958, as amended.

            ____  Business Development Company. Buyer is a business development
                  company as defined in Section 202(a)(22) of the Investment
                  Advisors Act of 1940, as amended.

            ____  Corporation, etc. The Buyer is a corporation (other than a
                  bank, savings and loan association or similar institution),
                  Massachusetts or similar business trust, partnership, or
                  charitable organization described in Section 501(c)(3) of the
                  Internal Revenue Code of 1986, as amended.

            ____  Bank. The Buyer (a) is a national bank or banking institution
                  organized under the laws of any State, territory or the
                  District of Columbia, the business of which is substantially
                  confined to banking and is supervised by Federal, State or
                  territorial banking commission or similar official or is a
                  foreign bank or equivalent institution, and (b) has an audited
                  net worth of at least $25,000,000 as demonstrated in its
                  latest annual financial statements, a copy of which is
                  attached hereto.

      3. The term "securities" as used for purposes of the calculation of the
dollar amount in paragraph 2 excludes: (i) securities of issuers that are
affiliated with the Buyer, (ii) securities that are part of an unsold allotment
to or subscription by the Buyer, if the Buyer is a dealer, (iii) securities
issued or guaranteed by the U.S. or any instrumentality thereof, (iv) bank
deposit notes and certificates of deposit, (v) loan participations, (vi)
repurchase agreements, (vii) securities owned but subject to a repurchase
agreement and (viii) currency, interest rate and commodity swaps.

      4. For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Buyer, the Buyer used the cost
of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934, as
amended.

      5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.

                                      H-4
<PAGE>

      6. Until the date of purchase of the Rule 144A Securities, the Buyer will
notify each of the parties to which this certification is made of any changes in
the information and conclusions herein. Until such notice is given, the Buyer's
purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan as provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.

                                            By: ______________________________
                                                Name:
                                                Title:

                                            Date:____________________________

                                      H-5
<PAGE>

                                                                         ANNEX 2

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

           [FOR TRANSFEREES THAT ARE REGISTERED INVESTMENT COMPANIES]

      The undersigned (the "Buyer") hereby certifies as follows to the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates with respect to the Certificates described therein:

      1. As indicated below, the undersigned is the President, Chief Financial
Officer or Senior Vice President of the Buyer or, if the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933, as amended ("Rule 144A"), because Buyer is part of a Family of
Investment Companies (as defined below), is such an officer of the Adviser.

      2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (i) where the Buyer or the Buyer's Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.

            ____  The Buyer owned $___________ in securities (other than the
                  excluded securities referred to below) as of the end of the
                  Buyer's most recent fiscal year (such amount being calculated
                  in accordance with Rule 144A).

            ____  The Buyer is part of a Family of Investment Companies which
                  owned in the aggregate $__________ in securities (other than
                  the excluded securities referred to below) as of the end of
                  the Buyer's most recent fiscal year (such amount being
                  calculated in accordance with Rule 144A).

      3. The term "Family of Investment Companies" as used herein means two or
more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).

      4. The term "securities" as used herein does not include (i) securities of
issuers that are affiliated with the Buyer or are part of the Buyer's Family of
Investment Companies, (ii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iii) bank deposit notes and certificates of deposit,
(iv) loan participations, (v) repurchase agreements, (vi) securities owned but
subject to a repurchase agreement and (vii) currency, interest rate and
commodity swaps.

      5. The Buyer is familiar with Rule 144A and understands that the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates are relying and will continue to rely on the statements made herein
because one or more sales to the Buyer will be in reliance on Rule 144A. In
addition, the Buyer will only purchase for the Buyer's own account.

                                      H-6
<PAGE>

      6. Until the date of purchase of the Certificates, the undersigned will
notify the parties listed in the Rule 144A Transferee Certificate to which this
certification relates of any changes in the information and conclusions herein.
Until such notice is given, the Buyer's purchase of the Certificates will
constitute a reaffirmation of this certification by the undersigned as of the
date of such purchase.

                                          By: __________________________________
                                              Name:
                                              Title:

                                          IF AN ADVISER:

                                          _____________________________________
                                          Print Name of Buyer

                                          Date:_________________________________

                                      H-7
<PAGE>

                                    EXHIBIT I

                        REQUEST FOR RELEASE OF DOCUMENTS

To:   Wells Fargo Bank, N.A.
      1015 10th Avenue S.E.
      Minneapolis, Minnesota 55414-0031
      Attention: Inventory Control
      [and/or its designee]

Re:   Pooling and Servicing Agreement dated as of July 1, 2004 among Merrill
      Lynch Mortgage Investors, Inc., as depositor, Litton Loan Servicing LP, as
      servicer and Wells Fargo Bank, N.A., as trustee, Merrill Lynch Mortgage
      Investors Trust, Mortgage Loan Asset-Backed Certificates, Series 2004-HE1

      In connection with the administration of the Mortgage Loans held by you,
as Trustee, pursuant to the above-captioned Pooling and Servicing Agreement, we
request the release, and hereby acknowledge receipt, of the Mortgage File for
the Mortgage Loan described below, for the reason indicated.

Mortgage Loan Number:

Mortgagor Name, Address & Zip Code:

Reason for Requesting Documents (check one):

_______ 1.      Mortgage Paid in Full

_______ 2.      Foreclosure

_______ 3.      Substitution

_______ 4.      Other Liquidation (Repurchases, etc.)

_______ 5.      Nonliquidation              Reason:   __________________________

Address to which the Trustee should deliver the Mortgage File:

                                            By:______________________________
                                                     (authorized signer)

                                            Address:__________________________

                                            Date:_____________________________

<PAGE>

If box 1 or 2 above is checked, and if all or part of the Mortgage File was
previously released to us, please release to us our previous receipt on file
with you, as well as any additional documents in your possession relating to the
above specified Mortgage Loan.

If box 3, 4, 5 or 6 above is checked, upon our return of all of the above
documents to you as Trustee, please acknowledge your receipt by signing in the
space indicated below, and returning this form.

Trustee

Wells Fargo Bank, N.A.
Please acknowledge the execution of the above request by your signature and date
below:

_________________________________          _____________________________
Signature                                  Date

Documents returned to Trustee:

_________________________________          _____________________________
Trustee                                    Date

<PAGE>

                                    EXHIBIT J

                                   [RESERVED]

<PAGE>

                                    EXHIBIT K

                        OFFICER'S CERTIFICATE OF TRUSTEE

Merrill Lynch Mortgage Investors, Inc.
250 Vesey Street
4 World Financial Center, 10th Floor
New York, New York  10080

Re:   Merrill Lynch Mortgage Investors Trust, Mortgage Loan Asset-Backed
      Certificates, Series 2004-HE1

Reference is made to the Pooling and Servicing Agreement, dated as of July 1,
2004 (the "Agreement"), by and among Merrill Lynch Mortgage Investors, Inc., as
depositor (the "Depositor"), Litton Loan Servicing LP, as servicer (the
"Servicer") and Wells Fargo Bank, N.A., as trustee (the "Trustee"). I, [identify
the certifying individual], a [title] of the Trustee hereby certify to the
Depositor, and its officers, directors and affiliates, and with the knowledge
and intent that they will rely upon this certification, that:

1.    I have reviewed the Monthly Statements delivered pursuant to the Agreement
      since the last Officer's Certificate executed pursuant to Section 4.02 of
      the Agreement [or in the case of the first certification, since the
      Cut-off Date] (the "Trustee Information");

2.    Based on my knowledge, the information in the Monthly Statement, taken as
      a whole, does not contain any untrue statement of a material fact or omit
      to state a material fact necessary to make the statements made, in light
      of the circumstances under which such statements were made, not misleading
      as of the date hereof;

3.    Based on my knowledge, the Monthly Statements required to be prepared by
      the Trustee under the Agreement has been prepared and provided in
      accordance with the Agreement; and

4.    I am responsible for reviewing the activities performed by the Trustee
      under the Agreement and the Trustee has, as of the date hereof fulfilled
      its obligations under the Agreement and there are no significant
      deficiencies relating to the Trustee's compliance with this Agreement.

Date:

                                          Wells Fargo Bank, N.A., as Trustee

                                          By:       ____________________________

                                          Name:     ____________________________

                                          Title:    ____________________________

<PAGE>

                                    EXHIBIT L

                        OFFICER'S CERTIFICATE OF SERVICER

Merrill Lynch Mortgage Investors, Inc.
250 Vesey Street
4 World Financial Center, 10th Floor
New York, New York 10080
Wells Fargo Bank, N.A.
9062 Old Annapolis Road
Columbia, Maryland  21045

Attention:  Client Manager - MLMI Series 2004-HE1

Re:   Merrill Lynch Mortgage Investors Trust, Mortgage Loan Asset-Backed
      Certificates, Series 2004-HE1

Reference is made to the Pooling and Servicing Agreement, dated as of July 1,
2004 (the "Agreement"), by and among Merrill Lynch Mortgage Investors, Inc., as
depositor, Litton Loan Servicing LP, as servicer (the "Servicer") and Wells
Fargo Bank, N.A., as trustee. I, [identify the certifying individual], an
authorized representative of the Servicer hereby certify to the Trustee and the
Depositor, and its officers, directors and affiliates, and with the knowledge
and intent that they will rely upon this certification, that:

1.    I have reviewed the information required to be delivered to the Trustee
      pursuant to the Agreement (the "Servicing Information").

2.    Based on my knowledge, the information in the Annual Statement of
      Compliance, and all servicing reports, officer's certificates and other
      information relating to the servicing of the Mortgage Loans submitted to
      the Trustee by the Servicer taken as a whole, does not contain any untrue
      statement of a material fact or omit to state a material fact necessary to
      make the statements made, in light of the circumstances under which such
      statements were made, not misleading as of the last day of the period
      covered by the Annual Statement of Compliance;

3.    Based on my knowledge, the Servicing Information required to be provided
      to the Trustee by the Servicer under the Agreement has been provided to
      the Trustee; and

<PAGE>

4.    I am responsible for reviewing the activities performed by the Servicer
      under the Agreement and based upon the review required hereunder, and
      except as disclosed in the Annual Statement of Compliance, the Annual
      Independent Certified Public Accountant's Servicing Report and all
      servicing reports, officer's certificates and other information relating
      to the servicing of the Mortgage Loans submitted to the Trustee by the
      Servicer, the Servicer has, as of the last day of the period covered by
      the Annual Statement of Compliance fulfilled its obligations under the
      Agreement.

Date:

                                        Litton Loan Servicing LP, as Servicer

                                        By:    ____________________________

                                        Name:  ____________________________

                                        Title: ____________________________

<PAGE>

                                    EXHIBIT M

                                   [RESERVED]

<PAGE>

                                    EXHIBIT N

                              FORM OF CAP CONTRACT

                             [INTENTIONALLY OMITTED]

<PAGE>

                                    EXHIBIT O

                                   [RESERVED]

<PAGE>

                                    EXHIBIT P

                       FORM OF ERISA REPRESENTATION LETTER

(for Transfers of Class C, Class P, Class R and Class R-X Certificates as
required by that certain Pooling and Servicing Agreement dated as of July 1,
2004 among Merrill Lynch Mortgage Investors, Inc., as depositor, Litton Loan
Servicing LP, as servicer and Wells Fargo Bank, N.A., as trustee)

      1. With respect to a purchase of the Class R and Class R-X Certificates,
the Purchaser is not an employee benefit plan subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), a plan subject to
Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"), or a
plan subject to any state, local or other federal law substantively similar to
the foregoing provisions of ERISA or the Code ("Similar Law") (collectively,
"Plan"), and is not directly or indirectly acquiring a [Class R] [Class R-X]
Certificate for, on behalf of or with any assets of any such Plan.

      2. With respect to a purchase of the Class C and Class P Certificates, the
Purchaser (A) is not a Plan and is not directly or indirectly acquiring the
Certificate for, on behalf of, or with any assets of any such Plan, (B) if the
Certificate has been the subject of an ERISA-Qualifying Underwriting, the
Purchaser is an insurance company that is acquiring the Certificate with funds
contained in an "insurance company general account," as defined in Section V(E)
of Prohibited Transaction Class Exemption ("PTCE") 95-60, and the acquisition
and holding of the Certificate are covered and exempt under Sections I and III
of PTCE 95-60, or (C) solely in the event the Certificate is a Definitive
Certificate, the Purchaser will deliver herewith an Opinion of Counsel
satisfactory to the Trustee, and upon which the Trustee shall be entitled to
rely, to the effect that the acquisition and holding of the Certificate will not
constitute or result in an nonexempt prohibited transaction under ERISA or the
Code, or a violation of Similar Law, and will not subject the Trustee, the
Servicer or the Depositor to any obligation in addition to those expressly
undertaken in the Pooling and Servicing Agreement, which Opinion of Counsel
shall not be an expense of the Trustee, the Servicer or the Depositor.

                                         Very truly yours,

                                         _______________________________________
                                         NAME OF PURCHASER

                                         By: ___________________________________
                                         Name: _________________________________
                                         Title: ________________________________

<PAGE>

                                    EXHIBIT Q

                            FORM OF POWER OF ATTORNEY

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO
LITTON LOAN SERVICING LP
4828 Loop Central Drive
Houston, Texas 77081
Attn: _________________________________

                            LIMITED POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that _______, having its principal place of
business at ________, as Trustee (the "Trustee") pursuant to that Pooling and
Servicing Agreement among ________ (the "Depositor"), Litton Loan Servicing LP
(the "Servicer"), and the Trustee, dated as of 1, _______ 200__ (the "Pooling
and Servicing Agreement"), hereby constitutes and appoints the Servicer, by and
through the Servicer's officers, the Trustee's true and lawful Attorney-in-Fact,
in the Trustee's name, place and stead and for the Trustee's benefit, in
connection with all mortgage loans serviced by the Servicer pursuant to the
Pooling and Servicing Agreement for the purpose of performing all acts and
executing all documents in the name of the Trustee as may be customarily and
reasonably necessary and appropriate to effectuate the following enumerated
transactions in respect of any of the mortgages or deeds of trust (the
"Mortgages" and the "Deeds of Trust", respectively) and promissory notes secured
thereby (the "Mortgage Notes") for which the undersigned is acting as Trustee
for various certificateholders (whether the undersigned is named therein as
mortgagee or beneficiary or has become mortgagee by virtue of endorsement of the
Mortgage Note secured by any such Mortgage or Deed of Trust) and for which the
Servicer is acting as servicer, all subject to the terms of the Pooling and
Servicing Agreement.

This appointment shall apply to the following enumerated transactions only:

1.    The modification or re-recording of a Mortgage or Deed of Trust, where
      said modification or re-recordings is for the purpose of correcting the
      Mortgage or Deed of Trust to conform same to the original intent of the
      parties thereto or to correct title errors discovered after such title
      insurance was issued and said modification or re-recording, in either
      instance, does not adversely affect the lien of the Mortgage or Deed of
      Trust as insured.

2.    The subordination of the lien of a Mortgage or Deed of Trust to an
      easement in favor of a public utility company of a government agency or
      unit with powers of eminent domain; this section shall include, without
      limitation, the execution of partial satisfactions/releases, partial
      reconveyances or the execution or requests to trustees to accomplish same.

3.    The conveyance of the properties to the mortgage insurer, or the closing
      of the title to the property to be acquired as real estate owned, or
      conveyance of title to real estate owned.

<PAGE>

4.    The completion of loan assumption agreements.

5.    The full satisfaction/release of a Mortgage or Deed of Trust or full
      conveyance upon payment and discharge of all sums secured thereby,
      including, without limitation, cancellation of the related Mortgage Note.

6.    The assignment of any Mortgage or Deed of Trust and the related Mortgage
      Note, in connection with the repurchase of the mortgage loan secured and
      evidenced thereby.

7.    The full assignment of a Mortgage or Deed of Trust upon payment and
      discharge of all sums secured thereby in conjunction with the refinancing
      thereof, including, without limitation, the assignment of the related
      Mortgage Note.

8.    With respect to a Mortgage or Deed of Trust, the foreclosure, the taking
      of a deed in lieu of foreclosure, or the completion of judicial or
      non-judicial foreclosure or termination, cancellation or rescission of any
      such foreclosure, including, without limitation, any and all of the
      following acts:

      a.    the substitution of trustee(s) serving under a Deed of Trust, in
            accordance with state law and the Deed of Trust;

      b.    the preparation and issuance of statements of breach or
            non-performance;

      c.    the preparation and filing of notices of default and/or notices of
            sale;

      d.    the cancellation/rescission of notices of default and/or notices of
            sale;

      e.    the taking of a deed in lieu of foreclosure; and

      f.    the preparation and execution of such other documents and
            performance of such other actions as may be necessary under the
            terms of the Mortgage, Deed of Trust or state law to expeditiously
            complete said transactions in paragraphs 8.a. through 8.e., above.

The undersigned gives said Attorney-in-Fact full power and authority to execute
such instruments and to do and perform all and every act and thing necessary and
proper to carry into effect the power or powers granted by or under this Limited
Power of Attorney as fully as the undersigned might or could do, and hereby does
ratify and confirm to all that said Attorney-in-Fact shall lawfully do or cause
to be done by authority hereof.

Third parties without actual notice may rely upon the exercise of the power
granted under this Limited Power of attorney; and may be satisfied that this
Limited Power of Attorney shall continue in full force and effect and has not
been revoked unless an instrument of revocation has been made in writing by the
undersigned.

<PAGE>
 IN WITNESS WHEREOF, _________ as Trustee pursuant to that Pooling and Servicing
Agreement among the Depositor, the Servicer, and the Trustee, dated as of
_________ 1, 200__ (________ Mortgage Loan Asset Backed Certificates, Series
200__-___), has caused its corporate seal to be hereto affixed and these
presents to be signed and acknowledged in its name and behalf by _________ its
duly elected and authorized Vice President this _________ day of _________,
200__.

                                       _________________________________________
                                       as Trustee for _____ Mortgage Loan Asset
                                        Backed Certificates, Series 200__-___

                                    By __________________________________

STATE OF _____________

COUNTY OF ____________

On _________, 200__, before me, the undersigned, a Notary Public in and for said
state, personally appeared _________, Vice President of__________ as Trustee for
_________ Mortgage Loan Asset Backed Certificates, Series 200__-___, personally
known to me to be the person whose name is subscribed to the within instrument
and acknowledged to me that he/she executed that same in his/her authorized
capacity, and that by his/her signature on the instrument the entity upon behalf
of which the person acted and executed the instrument.

WITESS my hand and official seal.

           (SEAL)
                                                      __________________________
                                                                   Notary Public

                                  My Commission Expires ________________________